Tax reform bills to benefit Nigerian workers – Taiwo Oyedele

Taiwo Oyedele, Chairman of Nigeria’s Presidential Committee on Fiscal Policy and Tax Reforms, has emphasized that the proposed tax reform bills are designed to significantly benefit Nigerian workers. In response to concerns raised by the Nigeria Labour Congress (NLC), Oyedele outlined several key provisions aimed at improving workers’ welfare.

Key Provisions of the Tax Reform Bills

1. Exemption for Low-Income Earners: Approximately one-third of Nigerian workers, both in the public and private sectors, earning up to ₦1 million annually (about ₦83,000 per month), will be fully exempted from Pay-As-You-Earn (PAYE) tax. Additionally, workers earning up to ₦20 million annually (about ₦1.7 million per month) will experience reduced PAYE tax rates.  
2. Support for Armed Forces: Members of the armed forces engaged in combating insecurity, along with other ranks, will be exempt from PAYE tax.  
3. Reduction in Cost of Living: The reforms propose zero VAT on essential items such as food, healthcare, and education, which constitute about 60% of household consumption. Additionally, VAT exemptions are planned for transportation, renewable energy, compressed natural gas (CNG), baby products, sanitary towels, and fuel products, covering over 20% of all consumptions. These measures aim to alleviate the rising cost of living for workers.  
4. Affordable Housing Initiatives: The bills include provisions for VAT exemption on rent and property acquisition, as well as the removal of stamp duties on rents below ₦10 million, to promote affordable housing.  
5. Employment and Business Growth: To stimulate job creation, the reforms offer tax incentives for employers who hire additional workers. They also introduce tax-friendly rules to attract remote work opportunities and provide tax exemptions for 97% of Small and Medium Enterprises (SMEs). Furthermore, the harmonization and reduction of corporate tax rates for large businesses are expected to foster growth and create more employment opportunities.  
6. Simplification of Tax System: The reform aims to simplify the tax system by eliminating various reliefs and allowances, adjusting tax bands and rates to achieve a lower effective tax rate for workers. This simplification is intended to make tax filing more accessible, even for individuals with basic education.  
7. Digital Tax Administration: The bills propose outlawing cash payments for taxes and enabling digital payment options such as USSD, bank cards, and transfers. Third parties may assist with technology implementation but will not be involved in tax collection or assessment.  
   

Government’s Commitment to Reform

Despite some criticisms, Oyedele asserts that the proposed tax reforms represent a significant opportunity to address long-standing issues in Nigeria’s tax system. He emphasizes the administration’s commitment to reform and invites constructive engagement to refine the implementation of these measures. The goal is to establish a robust fiscal foundation that supports economic growth and development. 

In summary, the proposed tax reform bills are structured to reduce the tax burden on workers, lower the cost of essential goods and services, promote affordable housing, stimulate employment, and simplify the tax system all aimed at enhancing the welfare of Nigerian workers.