The country’s taxes on food, housing rent, and public transit services would all be eliminated, according to plans made by the federal government through the Presidential Committee on Fiscal Policy and Tax Reforms.
The committee’s head, Taiwo Oyedele, said this in an interview with Channel Television. He claims that the goal of the initiative is to lower the cost of essential needs for Nigerians.
“What we discovered was that not just the tax system, but also the VAT system, imposed an undue burden on the poorest people. For example, you had some food items. A few of them were exempt.”
“And, without sounding too technical, when you declare an item is exempt from VAT, it means that you must shoulder any VAT incurred prior to the final stage. When you claim it’s zero-rated, that means that all VAT from the start to the completion of the process is removed. We determined that food should not only be exempt, but also zero-rated.”
“What we have considered are the essential necessities of life—food, housing (if you do not own a home), transportation, education, and healthcare. We deliberately identified those items. And we have fully removed practically all of the taxes that apply to them, including no VAT.”
“We have also developed some proposals where government can give relief to private sector employers who provide transportation relief to their workers. Also, we’ve had a suggestion for more employment, so if an employer hires more people than they regularly do, say the average of the previous three years, they get some relief, which is intended to boost job creation.”
“So we believe that through fiscal policy and taxation, we can make it more cheap for Nigerians to meet their fundamental needs. Shared passenger transport is fully tax-free, but if you hire a cab, we assume you’re not the poorest Nigerian, you must pay tax, however, if you take a bus, like people in Lagos do to Danfo and Molwe, you know, that is completely tax-free. So that’s what we’ve done so far on that particular issue,” he explained.
Speaking further, Oyedele stated that the committee had proposed that small enterprises be excluded from company income tax and withholding taxes and that their employees likewise be exempt from personal income tax.
He clarified that companies having an annual revenue of N50 million have been evaluated against those classified as small businesses. “So, you don’t have to worry about all these taxes if your turnover is 50 million or less. And according to our analysis, that accounts for about 97% of small enterprises.
Additionally, he revealed that by 2025, taxes would rise by 2.5 percent, from 7.5 percent to 10 percent.
“The legislation we are putting up to the National Assembly calls for a 7.5 percent rate to increase to 10 percent by 2025. It’s unclear when they will be able to approve the legislation. The year that the following increases will take effect is also noted.”
“We have a matching decrease in personal income tax while we are doing it. Individuals who make N1.5 million or less each month will have their personal income tax reduced. Over the following two years, the corporate income tax rate will decrease by 30% to 25%. That is a noteworthy decrease.”
“Other taxes they pay are quite many: IT levy, education tax, etc. All these we are consolidating into a single one. They will pay 4% initially. That will drop to two in the upcoming years. commensurate decrease in the tax on personal income,” he concluded.
