By Henry Umoru

ABUJA—Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has said the proposed tax reform bills currently before the National Assembly have made specific provisions for what funds to be generated from the Valued Added Tax (VAT) proceeds should be spent on.

He spoke at a roundtable yesterday in Abuja on the tax reform bills organised by the National Institute for Legislative and Democratic Studies, NILDS.

Oyedele said Nigerians had nothing to fear with regard to the bills as the expected funds would not be mismanaged by the government at the sub-regional levels.

According to him, no state governor or local council authority in the country will spend VAT on white elephant projects as the bills have in place a framework on how to generate taxes and spend it.

Oyedele, who also clarified that the Revenue Mobilization Allocation and Fiscal Commission, RMAFC, had nothing to do with VAT because it was not part of revenues captured in the nation’s constitution.

He said: “We have a document we call the National Fiscal Policy that speaks to our principles and framework as a country around taxation; who should pay tax, how much should they pay, how should they pay, among other issues.

Expenditure framework

“We have another framework for spending. How should we spend our money? What should be the priority, and the quality of spending.

“For example, there are more than 15 airports in Nigeria today built by different states that should not have been built because they were not necessary.

“We have states with flyovers where they have no traffic. They’ve never had a traffic jam in those places since the states were created.

“We have states with malls where people don’t go, but they have built those malls, even though they have no primary schools with roof and books. They have no health centers. They have no road from the farm to the market. This is a misplaced priority.

“We know the priorities of our people. They are in multidimensional poverty. The four dimensions of poverty are education, health, living standard, insecurity, and unemployment.

“That’s what should be our priority as well. So we’ve stated that clearly in our national fiscal policy. We also have the framework and policy around borrowing. What should you borrow for? If you’re borrowing dollars, how should you spend it in naira? Should you even borrow dollars to do naira investments?
“Should you borrow and spend it on overhead? Or should it be only infrastructure? What qualifies as infrastructure? What should you subsidize?

“Why is it that it’s the train that we are subsidizing? To the extent that today the money we make from running train services is not enough to pay interest on the loan.

“What’s going to happen is predictable. Because very soon you suffer budgetary allocations, you suffer funding, and infrastructure will be abandoned even though we borrowed in hundreds of millions of dollars. This framework is also in our fiscal policy, including conditional cash transfer as subsidy.

What should be subsidised

“Should we subsidize anything as a country? If yes, what should we subsidize and how? Is it production? Is it consumption? Is it agriculture? Is it manufacturing? Is it everybody or just the poor?
“When you are doing conditional cash transfer, how should you do it? It’s there.”

Role of RMAFC

Oyedele, who noted that those saying the committee did not carry RMAFC along did not study the constitution very well, said: “The role of RMAFC is to determine formulas for distributing revenue. Our view is that VAT is not in the constitution.

“Section 162 of the constitution, that speaks to the role of the RMFAC as advisory, is focusing on federation revenues. So this VAT is actually state revenue. And that’s why when the military decreed it in 1993, it replaced the sales tax that states were collecting.

“That is the reason VAT does not go to the regular federation accounts. It goes to a special pool accounts, then we share it to states and their local governments.

“The Federal Government keeps a small portion for administrative needs and also recognising that if we were to collect VAT by state level, the federal government will be entitled to Import VAT, International VAT, and interstate VAT.

“In fact, if we start collecting VAT at state level, you know the biggest winner will be the federal government. The federal government will keep more than half of the VAT we are collecting today.”

On stories that the Federal Inland Revenue Service, FIRS, was planning to import the Alpha Beta Company from Lagos to serve as tax consultants to the FIRS, Oyedele described them as false.

He said: ‘’The proposed bills banned the FIRS from engaging tax consultants, unlike if the states are allowed to be collecting VAT.

“If the states are collecting VAT, the next winner will be tax consultants. Some companies will file 36 returns every day with complications. As consultants, we make more money. Some people said, you guys are planning to use consultant, maybe you want to bring Alpha Beta to the centre.

“I just laughed and said, how do people come up with these ideas? Because you would never have thought about them until somebody makes up the story.

No consultants

“The FIRS has no need whatsoever for consultants to be able to collect VAT. In fact, inside those tax bills, there is a specific language that says, the FIRS cannot hire consultants to do assessments, they cannot hire them to do collection, they cannot hire them to do any work that is a routine work of the tax officers.”

In his remarks, the President of the Senate, Senator Godswill Akpabio, said the Tax Reform Bills represented what he described as a critical step forward in modernizing the country’s tax system and ensuring a more equitable distribution of the tax burden among all Nigerians.

Akpabio, who noted that the bills were designed to enhance efficiency, improve revenue generation, and ultimately, build a stronger, more prosperous Nigeria for all, said: “Regrettably, the introduction of these bills has been met with some misunderstanding and even politicization by certain segments of our society.

“Don’t see this as a setback, but rather as a testament to the growing democratic maturity of our nation.
As people’s representatives, we want to assure our compatriots that the members of the National Assembly have heard your voices.

“We stand here, not as adversaries, but as partners in the quest to build the Nigeria of our dreams. We know that we have the unwavering trust of the Nigerian people, and we will never, ever, betray that sacred trust in the performance of our duties.”

Tax burden

On his part, the Director General of NILDS, Professor Abubakar Sulaiman, said contrary to fears in some quarters, the bills were designed to reduce the burden of taxation on all people by the government.

He also said they would make the tax system more progressive and less regressive and simplify the tax system, by making it more accountable and understandable.

Suleiman said: “While the tax reform bills have garnered an unprecedented level of public scrutiny, the controversies surrounding the bill underscore the realization by the Nigerian people that there is need for a fair and balanced tax system that mirrors the specificities of the Nigerian society.”

Recall that on October 3, 2024, President Tinubu transmitted four tax reform bills to the National Assembly for consideration, following the recommendations of the Presidential Committee on Fiscal and Tax Reforms, headed by Taiwo Oyedele, for the review of existing tax laws.

The bills include the Nigeria Tax Bill 2024, which is expected to provide the fiscal framework for taxation in the country, and the Tax Administration Bill, which will provide a clear and concise legal framework for all taxes in the country and reduce disputes.

Others are the Nigeria Revenue Service Establishment Bill, which will repeal the Federal Inland Revenue Service Act and establish the Nigeria Revenue Service, and the Joint Revenue Board Establishment Bill, which will create a tax tribunal and a tax Ombudsman.