Tax reform bills: Reps want contentious sections expunged

Members of the House of Representatives on Wednesday called for removal of contentious clauses from the tax reform bills as the proposed legislation scaled second reading at the Green Chamber. This is as the lawmakers also raised concerns over conflicts in some of the clauses with the 1999 Constitution and lack of interpretation of some […]

Members of the House of Representatives on Wednesday called for removal of contentious clauses from the tax reform bills as the proposed legislation scaled second reading at the Green Chamber.

This is as the lawmakers also raised concerns over conflicts in some of the clauses with the 1999 Constitution and lack of interpretation of some of the wordings in the proposed reform law.

They voiced their concerns during the debate on the general principles of the tax reforms bills sent to the House by President Bola Ahmed Tinubu.

The House later passed the tax reform bills for a second reading after adopting the revised position of the Nigerian Governors’ Forum (NGF) on VAT sharing formula and other key aspects that generated controversies in the proposal.

The passage followed the consolidation of the four reform bills and extensive debates on the general principles of the bill led by the House Leader, Prof Julius Ihonvbere.

Concerns over contentious clauses, lack of interpretation 

Lawmakers, especially, those from the North, raised concerns over contentious clauses in the bills and lack of clarity in some of the provisions of the bills.

Rep. Sada Soli Jibia (APC, Katsina) in his debate, said while the bill will enhance efficiency, ensure compliance, and harmonise tax collection within the three tiers of government, there were several inconsistencies and challenges in some clauses of the bill that must be addressed.

He said among the inconsistencies is the conflict between some of the clauses with the 1999 Constitution of the Federal Republic of Nigeria.

“Some of these challenges are constitutional and jurisdictional concerns, particularly in Section 141, which deals with the supremacy clause which contradicts some of the positions of the Constitution of the Federal Republic of Nigeria. Then, there is the issue of overlap on the existing laws, particularly, the Personal Income Tax Act, Company Income Tax Act and the FIRS Tax Act.

“There is the practical issue of this law in Section 122; in Section 95 to Section 119,” he said.  

Similarly, Rep Abubakar Hassan Fulata (APC, Jigawa) who also raised concern over some of the provisions of the bills said all proposals, with the exception of the one dealing with tax administration, have no interpretation clauses.

He noted that a bill without an interpretation clause is subject to abuse and to the whims and caprices of whoever is going to interpret the bill.

He said, “Therefore, we must ensure that there is an interpretation clause on the other three bills”.

Rep. Fulata added that the clause dealing with the  systematic phasing-out of TetFund, NITDA and NASENI should be completely deleted.

The lawmaker further added that all the clauses with inconsistencies should be removed.

He cited examples of some of the sections with inconsistencies to include Sections 197, 198, 199, 200, 2001, and 2002, which he said should be removed.

He also faulted the aspect of the bills which seek to amend 40 Acts, saying, the said Acts were not brought before the parliament.

He said, “Those 40 Acts should be placed before us so that we compare against those bills. About 40 Acts are being repealed and phased out by these Acts that we are dealing with.

“Then, I am also putting it forward that Section 38 presents a position of double taxation. If you are buying a property, the buyer will pay tax, also, the seller will pay tax. This amounts to double taxation.”

Lawmaker opposes inheritance tax 

On his part, Rep. Ahmed Jaha (APC, Borno) in his debate on the bill expressed reservations and rejected the idea of inheritance tax as proposed in the bill, saying such is against Islam,  Christian and traditional religion.

He said, “And at the risk of sounding selfish or immodest, I totally reject the issue of inheritance tax as may be imputed in the family income tax. Not only in Islam, in all religions including our traditional religion, nobody takes for granted the estate of a deceased. 

“So either in Christianity or in Islam or even in traditional religion, people protect with high sense of responsibility and obligation the estate of a deceased person when and wherever the need arises.

“Particularly in Islam, you are not  allowed to take even a packet of pure water out of inheritance and give it to somebody that is not the heir or entitled to that particular inheritance,” he said. 

He said there was a need to look into that aspect of the bill at the public hearing.

House adopt govs’ position on VAT

Earlier, the lawmakers in passing the bill for second reading, aligned themselves with the position of the NGF, which had in January adopted a revised VAT sharing formula of 50% based on equality, 30% based on derivation, and 20% based on population.

This is against the earlier proposal of the Taiwo Oyedele-led Tax Reform team, which had proposed 20% based equality, 60% based on derivation and 20% based on population.

The House also agreed with the governors that there should be no increase in the VAT rate or reduction in Corporate Income Tax (CIT) at this time to maintain economic stability. 

The lawmakers further aligned with the governors that there should be no terminal clause for the Tertiary Education Trust Fund (TETFUND), National Agency for Science and Engineering Infrastructure (NASENI) and National Information Technology Development Agency (NITDA) in the sharing of development levies in the bills.

Daily Trust reports that the bills were consolidated. By consolidation, the four bills were harmonised as one and will be treated together in accordance with the House Rules which require that similar bills are consolidated.

The bills which were consolidated and passed include: “A Bill For an Act to Provide for the Assessment, Collection of, and Accounting for Revenue Accruing to the Federation, Federal, States and Local Governments; Prescribe the Powers and Functions of Tax Authorities, and for Related Matters (HB.1756); A Bill for an Act to Repeal the Federal Inland Revenue Service (Establishment) Act, No.13, 2007 and  Enact the Nigeria Revenue Service (Establishment) Bill to Establish Nigeria Revenue Service, charged  with Powers of Assessment, Collection of, and Accounting for Revenue Accruable to the Government of the Federation and for Related Matters (HB.1757).

Others include: “A Bill for an Act to Establish the Joint Revenue Board, the Tax Appeal Tribunal and the Office of the Tax Ombudsman, for the Harmonisation, Coordination and Settlement of Disputes arising from Revenue  Administration in Nigeria and for Related Matters (HB.1758) and A Bill for an Act to Repeal Certain Acts on Taxation and Consolidate the Legal Frameworks Relating  to Taxation and Enact the Nigeria Tax Act to Provide For Taxation of Income, Transactions and Instruments, and for Related Matters (HB.1759).

Daily Trust reports that the House had last year suspended debate on the bills following mounting opposition from some governors, particularly from the North, over the sharing formula of VAT.

However, the governors soft-pedalled and proposed some conditions for them to back the bills, among them, a review in the VAT sharing formula.

Presenting the motion for second reading on Wednesday, the leader of the House, Prof. Ihonvbere, stated that the resumption of the debate took into cognisance the position of the governors on the bills.

The House Leader, who led the lead debate stressed the necessity of overhauling the country’s tax reform which he described as obsolete.

He said the bill which aims to modernise the tax reform system will empower citizens and enhance inclusive growth. 

Ihonvbere added that the tax reform will benefit Nigerians if passed as it proposes harmonisation of multiple taxes, reduced PAYE tax, zero VAT on food, healthcare, education etc and also provides incentives for low income employees.

Tax reform will boost national growth 

In their contributions to the debate on the general principles of the bills, majority of the lawmakers spoke in support of passage of the bill for second reading.

They said the tax reform bills if passed would spur economic development and growth across the country.

In his contribution to the debate, Rep Bamidele Salam (PDP, Osun), said the bill will ensure more resources accrue to the subnational government to be able to provide the needed development.

Salam, however, added that the paramount consideration in tax reforms should be the wellbeing and welfare of the Nigerian people.

Rep Ademorin Kuye, while supporting the bill, said the need for revenue generation to meet the country’s infrastructural deficit cannot be overemphasised; hence, the tax reforms should be supported.

Chinda, Dasuki propose tax reduction

In their separate contributions, the House Minority Leader, Kingsley Chinda and a Sokoto lawmaker, Abdussamad Dasuki, proposed reduction in the VAT percentage.

Chinda said: “We all agree that our tax laws need rejigging. The spirit behind the bills is good, but there are issues with the letters. Rather than increase, is it possible for us to have a decrease in the tax?

Dasuki also proposed a reduction of VAT from the current 7.5 per cent to about 3%, saying doing so will help to address inflation and bring relief to poor Nigerians.

This is as he emphasised the need to get data from the Revenue Mobilisation and Fiscal Commission to guide issues of revenue sharing.

After an extensive deliberation, the consolidated bills were passed for second reading and referred to the House Committee on Finance for further legislative action.