FG Proposes Zero Percent VAT On Food, Education, Healthcare

Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr Taiwo Oyedele, on Monday, said the proposed tax reform bills before the National Assembly are not aimed to undermine any region of the country.

Mr Oyedele, who disclosed this in Abuja, during an interactive session on the proposed Nigeria Tax Bill, 2024, organised by the House of Representatives, lamented the country’s present socioeconomic realities, which showed 33.88% high inflation and unemployment; over 95 million people living in monetary poverty, while 133 million people experience multidimensional poverty.

He explained that the present administration seeks to “do away with nuisance taxes with very low revenue yield, high cost of collection and ultimate burden on the poor and small businesses; focus on high revenue-yielding taxes that are broad-based and relatively easy to collect; Merge taxes and levies that are imposed on the same or substantially similar tax base; keep the total number of taxes across all levels of government to a single digit, as well as Institutionalise the tax harmonisation reform to ensure sustainability.”

In his presentation, Mr Oyedele, who maintained that, “There is no negative thinking about any region or anything,” disclosed that the administration proposed zero percent VAT on food, education, and healthcare. Exempt rent, transport, etc; increase rate on non-essential items to partly offset reduction on essential items, as well as discontinue with other consumption taxes and charge only VAT where applicable, while all businesses will be able to recover VAT on their assets and services thereby lowering their overall costs and reducing inflation.

He argued that the proposed reform would only ensure efficiency and give more revenue to states where goods and services are consumed, while over 97 percent of SMEs will be exempted from charging VAT on their sales.

Mr Oyedele explained that currently, under Section 40 of the VAT Act, VAT revenue is allocated 15 percent to the Federal Government, 50 percent to the states and FCT, and 35 percent to local governments.

While stressing the urgent need to address multiple taxation and budgetary reforms, accountability and transparency, he averred that citizens’ participation is critical, and reforms must be people-centred.

In his keynote address, Speaker of the House Honourable Tajudeen Abbas said the reform bills will be diligently scrutinised in the best interest of Nigerians.

Abbas, who argued the House is yet to take a definitive position on the bills, explained that the House owes Nigerians a duty to ensure that the outcome of the proposals is in the national interest.

The speaker said the four bills represent critical proposals from the executive to expand Nigeria’s tax base, improve compliance, and establish sustainable revenue streams for the nation’s development.

He explained that the interactive session was organised to provide members with a comprehensive understanding of the bills and deepen their appreciation of their provisions, commence constructive dialogue on contentious or controversial areas, and build the consensus.

He said the interaction will help identify areas that need amendment, clarification, or improvement as well as consider the compatibility of these bills with the 1999 Constitution (as amended) and other extant laws.

The speaker said tax reforms form part of the provisions of the House Legislative Agenda because of their central role in achieving sustainable economic growth and development.

He stressed that in every modern state, taxes are the bedrock of public revenue, providing the resources required to deliver education, healthcare, infrastructure, and security.

Abbas lamented that despite being Africa’s largest economy, Nigeria still struggles with a tax-to-GDP ratio of just six percent—far below the global average and the World Bank’s minimum benchmark of 15 percent for sustainable development.

This is a challenge, he said, that must be addressed if the country is to reduce its reliance on debt financing, ensure fiscal stability, and secure our future as a nation.

He explained that the bills aim to diversify our revenue base, promote equity, and foster an enabling environment for investment and innovation.

He said as representatives of the people, they must approach these reforms thoughtfully, understanding their potential implications for every segment of society.

He said taxes should be fair, transparent, and justifiable, balancing the need for public revenue with the burdens they impose on individuals and businesses.

He said further that pre-legislative scrutiny is a well-established practice in many parliaments worldwide as it allows lawmakers to thoroughly review proposed legislation, address ambiguities, and ensure alignment with constitutional provisions before formal consideration.

He noted that the controversies surrounding these bills in the media, civil society, and among governance stakeholders are a reflection of their importance.

Such debates, he said, are healthy and necessary in a democracy.

He commended the Presidential Committee on Tax Reforms and Federal Inland Revenue for their work in presenting these proposals and asked members to approach this session with an open but critical mind.

Chairman of the Federal Inland Revenue Service (FIRS), Dr Zacch Adedeji, said the agency was awaiting the outcome of the bills.

He said the responsibility of the FIRS was to implement policies and laws passed by the National Assembly.

Source:- Tribuneonlineng