10 Ways Tax Bills Will Boost State Revenue — Presidency

The Nigerian Presidency outlines 10 impactful ways the proposed tax bills will enhance state revenue, fostering economic growth and improved public services across the nation.

In an explanatory statement on Wednesday, Temitope Ajayi, the Senior Special Assistant to the Presidency on Media and Publicity, provided further clarification on the controversial tax bills.

This followed President Bola Tinubu’s directive on Tuesday for the National Assembly and the Ministry of Justice to collaborate in addressing the concerns raised about the bill.

Tinubu’s submission of the Tax Reform Bills to the National Assembly has faced criticism, causing a clash between the president and several governors. The strongest objections have emerged from the northern region.

Some critics argue that the bills discriminate against the northern region, while others contend they would lead to further impoverishment of Nigerians.

To address these concerns, President Tinubu has directed the Justice Ministry to examine the issues raised and collaborate with the National Assembly leadership to refine any flaws in the bills.

“The government has no hidden agenda to justify the claim that the process is being accelerated,” stated Mohammed Idris, Minister of Information and National Orientation, in a Tuesday statement. “Following standard legislative procedures, the Federal General welcomes constructive feedback to resolve any ambiguities present in the bill.”

Similarly, President Tinubu has instructed the Federal Ministry of Justice and relevant officials involved in drafting to collaborate closely with the National Assembly. This is to ensure that all legitimate concerns are addressed prior to passing the bills.

Ajayi elaborated on the advantages for state governments on Wednesday, saying, “People naturally resist change. When we are content with our current situation, it becomes incredibly challenging to embark on a new path or pursue greater achievements. Individuals who avoid risks often hesitate to explore unfamiliar areas despite the allure of potential rewards. Nonetheless, we should not let fear of the unknown confine us from exploring new opportunities just because our present circumstances seem satisfying.”

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Since the public discussion on the Tax Reform Bills began, significant opposition has primarily emerged from the north. Borno State Governor, Professor Babagana Zulum, stands as a prominent figure in this resistance due to his outspoken reasons against it—although some of these points may not align entirely with the facts and details outlined in the bills.

If Governor Zulum and other critics concerned about states being disadvantaged had thoroughly reviewed the four executive Bills, they would recognize their progressive and transformative nature. They would also understand that these Bills are designed primarily to enhance the fiscal strength of both the Federal government and sub-national entities.

He stated that during his public presentations, including the recent Channels TV Town Hall moderated by Seun Okinbaloye on Monday evening, Taiwo Oyedele, Chairman of the Presidential Committee on Tax and Fiscal Policy Reforms, along with other panelists once again presented persuasive arguments for passing the bills currently before the National Assembly.

Ajayi outlined ten ways in which the Tax Bills will benefit the states and boost their revenue-generating capabilities as follows:

The federal government plans to reduce its current 15% share of VAT revenue by transferring 5% to the states.

The Bills will allocate revenue from the Electronic Money Transfer levy exclusively to states, categorizing it as part of stamp duties.

The Bills aim to eliminate outdated stamp duty laws and introduce a simplified version of the law to boost state revenue.

Under the new arrangement, the Tax Bills will be introduced, and states will have the right to tax Limited Liability Partnerships.

Once approved by the National Assembly, the Tax Bills will allow the state government to benefit from tax exemptions on their bonds, bringing them in line with federal government bonds.

Under the proposed tax reform, states will benefit from a fairer model for VAT attribution and distribution, resulting in increased VAT revenue.

The coordinated tax administration system aims to offer states valuable tax insights, enhance capacity building and cooperation efforts, and expand the jurisdiction of the Tax Appeal Tribunal to address taxpayer disputes concerning state taxes.

The suggested tax legislation gives the Accountant General of the Federation authority to withhold unremitted taxes by a government or MDA and allocate them directly to the respective sub-national government, specifically concerning personal income tax from employees of federal institutions within those states.

A framework designed to grant autonomy to state internal revenue services and enhance the Joint Revenue Board, aimed at promoting collaborative fiscal federalism.

Legal framework for the taxation of lotteries and gaming, including the implementation of withholding tax to benefit state revenues.

The statement further clarified that the Tax Bills do not harm the states. In fact, by streamlining Nigeria’s tax system and boosting economic output, these tax and fiscal policy reforms offer incentives for states to transform into thriving economic centers. The challenge for governors will be to think creatively about investing in their state’s workforce and essential social and physical infrastructure needed to support business growth and socio-economic development.