PBAT Tax Reforms - Interesting Highlights

Tinubu's tax reform is an attempt to liberate Nigeria from its dependence on oil and achieve economic prosperity similar to the prosperous days of Nigeria before oil dependency.

The new tax reform is a better life for all Stakeholders as follows:

1. Eliminate tax for all low income earners on minimum wage,
2. Reduce tax for income earners
3. Cut-off tax touts and hoodlums 
4. Introduce efficient tax digital tax collection 
5. Reduce number of different taxes from 63 to 9 
6. Introduce one point of collection throughout the Nigeria - using Nigerian Revenue Service (NRS)
7. The new tax would definitely increase revenue for all tiers of government 
8. Ease of tax payment from your smart phones from the comfort of your home.
9. Sigh of relief for haulage drivers who pay  several taxes and levies imposed by tax touts and hoodlums before the good get to final destination, thereby hiking the prices of good and items.

Historical Perspective of How Tinubu Survive Two Terms of Governorship without FAAC

During his presidency, Obasanjo tried to frustrate Tinubu, the governor of Lagos State from 1999 to 2007, by withholding the monthly FAAC allocation for Lagos State. 

Obasanjo believed this would lead to Tinubu's impeachment and prevent his re-election for a second term as governor.

However, instead of being bogged down by the lack of revenue, Tinubu found a way to multiply Lagos' IGR to unprecedented levels, far surpassing the FAAC. Today, Lagos' IGR has increased by 7400% using Tinubu's template - from N600 million per month to N45 billion per month.

Background Information for Clearer Perspective

Below are the VAT contribution from some sectors in Nigeria:

• Alcohol VAT contributes less than 3% In states where alcohol is banned. 
• Big Sectors like Banks and FINTECH  contribute only 1.62% to VAT, because VAT is only charged on a small component of their income, such as fees and commissions, but not on interest or premium.
• Oil Marketing VAT contributes just only 0.63% since VAT is not charged on petroleum products.

With these background Information, then the new tax bill portends no danger to anybody, including the northern leaders pushing it back.

Rather, the tax is packaged with lots of benefits for the whole of Nigeria at large.

Noteworthy

• It is noteworthy that many states of federation couldn't efficiently generate their IGR due to so many loopholes. The new tax reform wants to help each tiers of government to generate IGR using the latest technology and world best practices. 
• Tinubu had done this in Lagos before, now he wants to replicate the success to every nook and crannies of Nigerian.
• But Nigeria needs only to give him the chance.
• It is noteworthy that with the glory of God vested in PBAT, his plan for Lagos has led to Internally  Generated Revenue of Lagos grew by 7,400 per cent between 1999 and 2021. That's is from N600m monthly in 1999 to over N45bn monthly as at 2021. You can confirm this from Punch Newspaper of 14/12/2021.

Notable Highlights from the new tax reforms

1. Reduction of Taxes: The new tax bill reduces the number of taxes from 63 to 9.

2. Salary Tax Reduction: Tax reduction for certain salary earners.

3. Elimination of Tax for Low-Income Earners: Low-income earners are exempt from paying taxes.

4. Ease of Tax Payment: Simplified tax payment, allowing citizens to pay taxes from their mobile phones from the comfort of their homes.

5. Purification of Northern Taxes: Removal of VAT from beer and alcoholic beverages in northern regions.

6. State Earnings Assurance: Ensures no state receives less than their current VAT earnings; many states will see significant increases.

7. Automated Tax Collection: Relieves the burden of tax collection from states and LGs with poor IGR through fully automated digital technology.

Intensive Mechanized Agriculture - More Money for Northern Nigeria

Northern Nigeria is the food basket of the nation. Engaging in intensive mechanized agriculture and its value chain can help generate unprecedented revenue, surpassing the current IGR.

Recommendations

1. Embrace the Opportunity: Citizens should seize this golden opportunity offered by PBAT before it's too late. For selfish political reasons, another government might lack the courage or political will to undertake this venture if it fails.

2. Purification of Income: This tax reform offers Northern leaders the chance to purify their income from VAT on beer, which is considered haram, if they truly fear Allah.

3. Mechanized Agriculture: Northern Nigeria, with its stable farmland, should adopt mechanized agriculture like Niger state to earn more VAT than any other state in Nigeria.

Conclusion

Nigerians have long prayed for a government with the courage to address national issues. Now that we have one, let's cooperate and provide the necessary support for economic prosperity. Delay is dangerous!

Sources 

1. Monthly IGR grew by 7,400% in 22 years, says Lagos

2. How to fix Nigerian broken tax system written by Taiwo Oyedele: