President Bola Tinubu has reassured northern leaders that the reforms will not compromise democratic principles. Speaking at the Nigerian Institute of Public Relations (NIPR) 2024 Annual Public Lecture in Kaduna, Information Minister Mohammed Idris emphasized the administration's commitment to participatory democracy.
"Even with our keenness for fundamental reforms of Nigeria’s tax system, Tinubu’s administration will never do anything to undermine the ideals of participatory democracy," Idris stated. He highlighted that the reforms are part of a broader macroeconomic strategy aimed at sustainable growth and development.
The tax reform package, which includes four main bills, seeks to overhaul Nigeria's tax system by simplifying tax codes, reducing burdens on small businesses, and streamlining tax collection. Senate Leader Michael Opeyemi Bamidele described the legislation as "a significant move to overhaul the country’s tax system."
Despite passing their Second Reading in the Senate, the bills have faced criticism from some lawmakers who argue they could disrupt fiscal federalism. However, the government has promised to address all concerns raised by stakeholders.
Zacch Adedeji, Executive Chairman of the Federal Inland Revenue Service (FIRS), noted that the reforms aim to correct structural imbalances and reduce dependency on oil revenues. "This is particularly an over-dependence on oil revenues, which has resulted in fiscal challenges, encouraged corruption, stirred regional tensions, and fostered an inefficient rentier economy amid soaring debts," he explained.
The proposed changes include a reduction in corporate income tax from 30% to 25% over two years and exemptions for low-income earners and small businesses. Additionally, the bills propose a shift in VAT revenue distribution based on consumption rather than central pooling.
As the debate continues, President Tinubu remains committed to engaging with all stakeholders to ensure the reforms benefit all Nigerians. The Senate Committee on Finance has been tasked with reviewing the bills and reporting back within six weeks.
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