Why tax reform is important now — Presidency

The Presidency has spoken on the urgent need for the recently proposed Tax Reform Bills, stating that Nigeria “can not continue on this path or wait for 20 years if this country is to deliver the prosperity we need for our people.”

This was disclosed in a statement by President Bola Tinubu’s spokesperson, Bayo Onanuga, on Monday.

READ ALSO:Okpebholo reinstates sacked Ambrose Alli varsity workers

According to the presidency, one of the reasons Tinubu embarked on the Tax and Fiscal Policy Reforms was to streamline tax administration in Nigeria and make the operating environment more conducive to business.

“For decades, businesses, investors, and private sector players in Nigeria have complained of being overburdened by a myriad of taxes and levies, including those earmarked to fund various government agencies and initiatives,” the Presidency said.

These challenges, the Presidency said, have made the country uncompetitive, driving some companies to relocate to more favourable economies and hindering the growth of local enterprises.

According to the Presidency, this initiative will ease the burden on businesses while ensuring continued funding for key government agencies through a phased implementation process that will be completed by 2030.

The Presidency stated, “The multiple taxes complicate the economic environment, making Nigeria uncompetitive for investment and preventing many businesses from growing or continuing their operations. Some companies have had to make the rational decision to relocate to other countries. We can not continue on this path or wait for 20 years if this country is to deliver the prosperity we need for our people.”

“The proposal, as contained in Section 59(3) of the Nigeria Tax Bill, only seeks to consolidate some of the earmarked taxes imposed on companies and replace them with a single tax to be shared with the key agencies as beneficiaries in a phased manner until 2030.

“The time frame offers ample opportunity for the affected agencies to explore other funding sources in addition to budgetary allocations in line with the constitution and international best practices.”

In response to criticism of the reform proposals, the Presidency stated that any claims that the bills would eliminate funding for government agencies were misleading.

The Presidency also dismissed claims that changing funding sources for agencies equates to their elimination, calling such assertions “a misrepresentation of facts.”

It noted that countries leading in sectors like education, science, and technology do not rely on earmarked taxes for specific agencies.

It explained, “It is a misrepresentation of facts to conclude that changing an agency’s funding source amounts to scrapping it. None of the countries leading globally in education, science, engineering, or information technology have similar earmarked taxes.

“The government imposes major taxes, be it income tax, consumption tax, or other taxes, to channel resources to its areas of priority at the time. Imposing a separate tax to fund an agency is an aberration that has yet to yield results despite the huge burden on businesses. The tax bill seeks to address this problem.”

The presidency, however, urged stakeholders, including governors, traditional rulers, civil society groups, and professional associations, to participate in the National Assembly’s upcoming public hearings on the reforms.

“Relevant stakeholders and public analysts owe it a duty to properly educate themselves about the bills’ contents and avoid misleading the public for any reason. We may be entitled to our opinions, but such views must be informed and based on facts, not emotions targeted at inflaming passions.

“In a period like this, when our people across the country look up to leaders for guidance and direction on matters of public importance, such as the Tax Reform Bills, leaders should be more measured in their public utterances to avoid heating the polity and polarising the country unduly.

“President Tinubu welcomes the public interest these bills have generated. He encourages leaders across the country, including Governors, Traditional rulers, Civil Society Activists, Students, trade associations, professional associations, and the general public, to take advantage of the Public Hearings that the National Assembly will organise to present their views on how best to reform our taxes and fiscal regime.

“What is never in doubt is the imperative of changing the existing tax laws and administration that have become obsolete and unhelpful in achieving the growth and development we desire for our country.”