Abuja, Nigeria — The Nigerian Senate on Thursday passed four major tax reform bills for second reading, moving forward with President Bola Tinubu’s sweeping tax overhaul despite mixed reactions from lawmakers and pushback from Northern governors.
The bills, transmitted to the National Assembly on October 3, 2024, aim to streamline Nigeria’s tax system, harmonize revenue collection, and establish new institutions to manage tax disputes. The proposed legislation includes the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill.
During the plenary session, the Senate engaged in extensive debate on the bills’ general principles. Lawmakers emphasized the importance of tax reform but raised concerns about timing and implementation.
Key Provisions and Institutions in the Bills
- Nigeria Tax Bill 2024: Sets a comprehensive fiscal framework for taxation in the country.
- Tax Administration Bill: Clarifies the legal framework for taxes, aiming to reduce disputes.
- Nigeria Revenue Service Bill: Proposes the replacement of the Federal Inland Revenue Service (FIRS) with a new Nigeria Revenue Service.
- Joint Revenue Board Bill: Seeks to establish a tax tribunal and an Office of the Tax Ombud to handle revenue disputes.
The Senate also considered proposals to reduce corporate tax rates from 30% to 25%, aiming to alleviate the tax burden on businesses. However, some lawmakers warned of unintended consequences, such as manufacturers passing costs onto consumers.
Sen. Ali Ndume’s Reservations
Senator Ali Ndume, the lone dissenting voice, expressed concerns over the timing and potential impact of the reforms. He called for broader consultations with governors, traditional rulers, and the National Economic Council (NEC) before proceeding.
“Reforms are necessary, but timing is critical,” Ndume cautioned. “We need to ensure buy-in from all stakeholders, especially concerning sensitive issues like VAT and derivation. Moving too quickly could have unintended consequences.”
Despite his reservations, other senators, including the Chief Whip, urged advancing the bills to the public hearing stage for further scrutiny.
Presidency’s Clarification and Defense
The Presidency, addressing regional concerns, emphasized that the reforms are not targeted at any specific region but are designed to bolster national development and strengthen fiscal institutions. President Tinubu has reiterated that the reforms align with his administration’s broader economic goals, aiming to foster growth and reduce the tax burden on Nigerians.
The Senate adjourned the matter to allow for a public hearing and a detailed clause-by-clause consideration of the bills.