Temitope Ajayi, Senior Special Assistant to President Bola Tinubu on Media and Publicity, has outlined ten ways the proposed Tax Reform Bills will enhance the financial capacity of states, countering widespread concerns about their implications.
Ajayi shared the benefits via a tweet on Wednesday, highlighting how the bills will ensure a fairer allocation of revenues, streamline tax processes, and empower states to generate and manage more income independently.
The bills under consideration include the Nigeria Tax Bill 2024, Nigeria Tax Administration Bill, Nigeria Revenue Service (Establishment) Bill, and Joint Revenue Board (Establishment) Bill. These reforms aim to address inefficiencies in Nigeria’s fiscal system while promoting shared economic prosperity.
Key Benefits Outlined by Ajayi:
- Increased VAT Revenue: States will receive an additional 5% share of the Federal Government’s Value-Added Tax (VAT) revenue.
- Exclusive Revenue from Stamp Duties: Income from the Electronic Money Transfer levy will be ceded exclusively to states.
- Updated Stamp Duty Laws: Repealing outdated laws will simplify processes and enhance revenue generation for states.
- Taxation on Partnerships: Limited Liability Partnerships will now fall under state tax jurisdiction.
- Tax-Exempt Bonds: States’ bonds will enjoy tax exemptions, aligning them with federal government bonds.
- Equitable VAT Distribution: New models for VAT attribution will provide states with higher income.
- Enhanced Tax Administration: Integrated systems will boost state tax intelligence, capacity, and dispute resolution.
- Personal Income Tax Deductions: Unremitted taxes by federal institutions in states will be deducted and credited directly to the respective states.
- Autonomy for Revenue Services: States’ internal revenue services will gain more autonomy, promoting collaborative federalism.
- Lottery and Gaming Taxation: Legal frameworks will allow states to tax lottery and gaming revenues, introducing withholding tax benefits.
Ajayi emphasized that these measures are not detrimental to states but provide an opportunity for economic transformation. He urged state governors to focus on infrastructure and workforce development to maximize these benefits.
Despite the outlined benefits, the bills have faced resistance, with critics, including Borno State Governor Babagana Zulum, arguing they may harm certain regions. Zulum has called for a review, warning of potential negative impacts on the North’s economy.
The reform bills, currently under debate, remain a contentious issue, sparking national dialogue on fiscal federalism and economic inclusivity.