*Adedeji: New Laws To Take Off In January
NIGERIANS whose monthly salary is less than N250,000 are now classified as poor and will be exempted from income tax under the new tax laws.
Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, who disclosed this during a television programme on Thursday, May 26, following President Bola Tinubu’s assented to four new tax Bills, described his two-year tenure leading the tax reform committee as both eventful and challenging.
He stated that the new laws would take effect from January next year and were not intended to increase taxes, but to stimulate economic activity in the country and track tax evaders, as well as protect businesses and ensure the government doesn’t tax poverty, assuring that the new laws are efficiency-driven, growth-focused and people-centric.
Oyedele said “this tax law will not give you cash in your pocket, but at least it won’t take your cash away if you are poor,” adding that nobody earning below the amount would have to pay taxes because they don’t even have enough.
According to him: “We have eliminated the tax component for people at the bottom, we have reduced for people at the middle and we have increased slightly for people at the top.
“That middle, we estimated it at about N1.8million to N2million a month. If you are earning that amount and below, your tax will not be zero, but it will reduce from what you are paying today.”
He noted that those who earn this amount are about five per cent of the Nigerian population, explaining that to arrive at the decision, his committee debated the poverty line of an average Nigerian.
“We debated this question; we said, ‘who is a poor person in Nigeria?’ First, we started with data, like the World Bank, and the UN will tell you two dollars, 15 cents a day per person means you are at the poverty line.
“There are people who do not earn two dollars a day, but they are not poor, because they produce the food that they eat and they do not pay for transportation. I lived and grew up in the village.
“So, we had to factor that in. We drew our own (poverty) line for Nigeria on the basis of an average of five people per family: two people working, if they are lucky, taking care of the five. When we did the Maths, it gave us an amount, and that was what we used in determining the income below which nobody should pay taxes.
“We came up with a N120,000 or N130,000 per two people working in a household of five. If the earnings are about N250,000, they can take care of themselves. Of course, they are not going to have luxury, but at least they can take care of themselves. They are poor, and they shouldn’t pay taxes.”
Oyedele stated that Nigeria currently collects only about 30 per cent of what it should be receiving in taxes, noting that the objective of the new tax laws is to close the 70 per cent gap.
The January 1 take off date for the implementation of the new tax laws was confirmed by Chairman of the Federal Inland Revenue Service (FIRS), Zach Adedeji, who added that modalities will be put in place ahead of the implementation.
Addressing State House Correspondents shortly after the President signed the Bills into law,
Adedeji explained that the six-month period was designed to give ample time to those saddled with the implementation to carefully prepare and ensure that all Nigerians are adequately sensitised.
Adedeji said with the signing of the Bills into law, the FIRS is now the Nigeria Revenue Service (NRS), whose expanded mandate include non-tax revenue collection, and lays out transparency, accountability and efficiency mechanisms.
“The Nigeria Revenue Service (Establishment) Bill, the third Bill, repeals the current Federal Inland Revenue Service Act and creates a more autonomous and performance-driven National Revenue Agency.
“Two hours ago before, we were FIRS, now we are Nigeria Revenue Service, with expanded scope to focus on tax collection and with match efficiency.”
Oyedele added that Tinubu had directed proper implementation of the laws, while ensuring collective participation of all stakeholders, adding: “The journey is just beginning; writing the law, no matter how beautiful, no matter how transformative, no matter how innovative, it means nothing if it is not properly implemented. So, we are mindful of that. We are not going to relax.
“Mr. President has given us the charge that now is time to move to implementation, and we are ready. We are prepared. It is not something we can’t do alone, even from the government side. It’s something we have to be collective about.”
He stated that the committee will now include the private sector, public sector, civil society, professional bodies and international partners, tax consultants and everyone that mean well will work for Nigeria.
