The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele has said that the tax reform bills currently before the National Assembly were aimed at getting rid of taxes that yield low income.
Oyedele made this known on Monday in Abuja at an interactive session on the tax reform bill organised by the House of Representatives.
He added that the bills are also aimed at institutionalising tax reforms so that it would be difficult for anybody to undo them.
Oyedele further explained that the bills were not aimed at undermining any region of the country.
He stressed that the current Value Added Tax, VAT, policy requires all companies to pay VAT from their headquarters which he said confer undue advantage on some states.
He emphasised that one of the proposed laws aimed to bring all tax laws into one while harmonising all the taxes which he argued has stunted the growth of the nation’s economy.
Oyedele noted that the proposed law sought a reduction of the federal government’s share of VAT while proposing that companies paying VAT should now make their return based on where the services being taxed were carried out.
He said currently, under Section 40 of the current VAT Act law, VAT revenue is allocated 15 percent to the Federal Government, 50 percent to the States and FCT, and 35 percent to Local Governments
He pointed out that the various states believe that VAT should be collected by them which explains why states like Lagos and Rivers have enacted their VAT laws, saying the VAT policy cannot work well if the states are allowed to collect VAT.
Oyedele stated: “For example, the current law requires that MTN makes its VAT return from its head office in Lagos. But what we are proposing is that such a return should be made based on the location where the calls were made. That will allow smooth computation of the derivation.
“The tax system lacks proper structure. We have obsolete laws which we are still amending. We have laws, but we are not respecting the laws.
“We have about 60 official tax laws which we have approved in Nigeria as a country. What other countries have approved is less than 10. The solution to our problems can never be to keep introducing new taxes. Rather, it is to get rid of the multiple taxes and maximise collection. As high as the number is, the unofficial ones are even more.
“First, we want to do away with those taxes that yield low income because they place a lot of burden on poor people and small businesses. Secondly, is to focus on high revenue-yielding taxes that are broad-based and easy to collect. We want a situation where we are able to institutionalise these reforms so that it will be difficult for anybody to undo them”.
Proposed tax bills aim at getting rid of low revenue-yielding taxes – Oyedele
