The Presidential Fiscal Policy and Tax Reforms Committee, chaired by Taiwo Oyedele, has announced plans to propose legislation to increase the Value Added Tax (VAT) from 7.5% to 10%. This move is aimed at addressing the country’s fiscal challenges and enhancing the efficiency of its tax system.
According to Oyedele, “The revenue profile of the country is abysmally low. Even if we were to dedicate the entire revenue to infrastructure, it would still fall short.” He emphasized the need for tax reforms, citing significant challenges in Nigeria’s tax revenue system.
The proposed tax law, which will be submitted to the National Assembly, includes a phased increase in VAT starting in 2025, with additional increases planned in subsequent years. Oyedele expressed uncertainty about the timeline for the law’s passage but stressed its importance for the nation’s fiscal health.
However, the committee is also proposing some relief measures, including reductions in personal income tax for individuals earning up to N1.5 million per month and a decrease in corporate income tax rates from 30% to 25% over the next two years.
“The overall fiscal situation is in crisis, affecting both tax and non-tax revenue streams,” Oyedele said. “We need to transform our revenue generation and optimize government assets.”
The committee aims to consolidate various existing taxes, such as the IT levy and education tax, into a single tax structure. Initially, this consolidated tax would be set at 4%, with plans to reduce it to 2% in the coming years.
Oyedele emphasized the importance of these reforms, saying, “We need to improve governance and financial management to ensure the nation’s fiscal health.”