Taiwo Oyedele, Chairman of Nigeria’s Presidential Committee on Fiscal Policy and Tax Reforms, has highlighted the pro-worker benefits of the tax reform bills introduced by President Bola Tinubu. These reforms aim to alleviate the tax burden on Nigerian workers, particularly those in the lower income brackets.
Key Provisions of the Tax Reform Bills
- Exemption for Low-Income Earners: Individuals earning up to ₦1 million annually (approximately ₦83,000 per month) will be fully exempt from Pay As You Earn (PAYE) tax. This exemption is designed to alleviate the financial strain on the lowest-paid workers.
- Reduced Tax Rates for Middle-Income Earners: Workers earning up to ₦1.7 million annually (about ₦141,000 per month) will benefit from reduced PAYE tax rates, ensuring that their tax obligations are more manageable.
- Zero VAT on Essential Goods and Services: The reforms propose a 0% Value Added Tax (VAT) on essential items such as food, healthcare, education, and transportation. These items constitute a significant portion of household consumption, particularly for low-income families.
- Incentives for Employers: The bills include tax incentives to encourage employers to hire more workers and offer better compensation. This includes tax breaks for wage awards and transport subsidies aimed at low-income earners.
- Simplification of Tax Processes: The reforms aim to simplify tax filing processes, making it easier for individuals, including those with basic education, to file their tax returns without assistance.
Oyedele emphasized that these reforms are among the most pro-worker tax changes in Nigeria’s history, aiming to reduce the tax burden on over 90% of workers in both the public and private sectors.
While the tax reform bills are currently under consideration by the National Assembly, they represent a significant shift towards a more equitable tax system in Nigeria.
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