The Chairman of the presidential fiscal policy and tax reforms committee, Taiwo Oyedele says the federal government is working on a system that will provide tax relief to 95 percent of the informal sector.
The Chairman who spoke at the closing session of the committee in Abuja on Sunday hinted that the plan is to exempt businesses earning N25 million a year or less, from the various taxes hindering their progress over time.
‘’So, we think that 95 percent of the informal sector should be legally exempted from all taxes; withholding tax, company income tax, even payee on their staff,” Oyedele said.
‘’We’re using data to inform our decisions. Currently, if you earn N25 million a year or less, you don’t have to pay company income tax, you don’t have to worry about VAT.
‘’We think that the informal sector are people who are trying to earn legitimate living, we should allow them to be and support them to grow to a point where they can then have the ability to pay taxes”, he stated.
Mr. Oyedele said that the Presidential Committee is already drafting laws to effect the necessary changes in the fiscal policy and tax reforms it is proposing, which would ensure that the reforms it is proposing will be backed by law so that it can be sustained by all governments coming in. This he added is to avoid a situation where all the efforts to reform the tax and fiscal ecosystem go down the drain after one or two years.
Mr. Taiwo Oyedele further noted that the new reforms being proposed by the Committee would focus on the top 5 percent of the informal sector, the middle class, and the elite for taxes.
He added that some of the taxes complained about by Nigerians are those already in the constitution, which the committee has looked at and called for their review.
“So, our expectation is, as we progress now from ideation, proposal to implementation, you’ll see less and less of those issues and then you’ll see harmony in the direction of the fiscal system,” he said.
‘’Not only in the number of taxes we collect, you will also see an improvement in how those monies are being spent.”
The Chairman of the committee also revealed that the committee has been working with the states and the local government councils as it pushes to harmonise the taxes into a single-digit system.
“So, we’re convinced, and that’s what the data tells us, that the right path we need to follow is the path where we repeal many of these taxes, harmonise whatever is left. We think we can keep that within single digits across local, state and federal governments combined, and then improve the efficiency of collecting those taxes”, Oyedele stated.
He also emphasised on the need for Nigeria to increase the threshold of exemption for small businesses and for low income earners because according to him, if these categories of people cannot make ends meet, it is difficult for someone asking them to pay tax.