Chairman of the Presidential Committee on Fiscal Policy and Tax Reform, Taiwo Oyedele, has said that if the new tax bill is passed by the National Assembly, wealthy Nigerians with a monthly income of over N100 million will face a personal income tax rate of 25%. He said it would be.
Advocating for a more streamlined and fair tax system in the country, he said that 90 percent of current taxpayers are people who should not be taxed.
The revelation was made on Monday at a breakout session of the 30th Nigeria Economic Summit organized by the Nigeria Economic Summit Group and the Ministry of Budget and National Planning in Abuja.
Mr. Oyedele emphasized the need to strike a balance between reducing the tax burden on low-income earners and ensuring that the wealthy contribute to government revenue.
“If you are earning N100 million a month, we are collecting up to 25 per cent from the wealthy because we have to balance the books,” Oedele said. .
The fiscal policy expert said the government is prepared and determined to ensure that the right individuals pay their taxes, noting that the committee is actively working to achieve its goals.
He added that the proposed changes are expected to come into effect from January 2025, upon passage of the bill by MPs.
Mr. Oyedele said that while middle-income earners with a monthly income of less than 1.5 million naira will have their personal income tax burden reduced, those with higher incomes will have their tax rate increased in stages, eventually reaching 25%. It was revealed that it would reach. Low-income earners are fully exempt from personal income tax.
The reform also aims to reduce the tax burden on companies.
Oyedele said: “Currently, you (businesses) pay VAT on assets, whether you build a factory, buy a laptop, or buy a car. If our reforms are implemented, we will get 100% of the credit back for services and assets.”
“People will pay taxes if we decide they have to pay taxes. What we recognize is that almost 90 percent of people who pay taxes should never have paid them in the first place. “They are the people who are the most important people in the world,” he said.
“So we came up with data that says 97 percent of the informal sector should be officially exempt from taxes. People don’t understand where we come from. They pay taxes. They’re not people. They’re just trying to survive.”
On how the commission works to ensure the right individuals pay their taxes, Oyedele said the team leverages primary data identification channels to accurately incorporate the right groups of taxpayers into the tax bracket. said.
In addition, the corporate income tax rate will be cut from 30% to 25%, which Oyedele described as “huge” for businesses. Other important tax adjustments include reducing or eliminating VAT on essential goods and services such as food, health, education, accommodation, and transportation.
These essential services account for a large portion of household expenditures for low-income groups, and the proposed reforms are aimed at easing their financial burden.
However, Mr Oyedele acknowledged that not all sectors would benefit from the reduced tax rate. For other goods and services, the value-added tax rate will increase to ensure the government’s revenue book balance.
He also pointed out that inflation is already acting as a “disorderly” tax on the people, eroding the value of people’s money without the need for legislation.
Addressing concerns about tax incentives and exemptions, Mr. Oyder said that indiscriminate incentives have a negative impact on the economy and that eliminating unnecessary incentives would provide relief to the corporate sector without sacrificing government revenue. I insisted that I could.
“We can’t give you all the incentives you’re looking for. We think the biggest low-hanging fruit is to remove those incentives, and that’s exactly what we’re doing. “There is no need to worry,” Oedele concluded.
