10 ways tax bills will make states richer – Presidency

The Senior Special Assistant to the Presidency on Media and Publicity, Temitope Ajayi on Wednesday, has shed more light on the controversial tax bills.

This was after President Bola Tinubu on Tuesday, directed the National Assembly and the Ministry of Justice to work together to address the concerns raised on the bill.

Criticisms have greeted Tinubu’s transmission of the Tax Reform Bills to the National Assembly. The move has pitted the president against some governors with the most vocal criticism coming from the northern region.

Some critics believe the bills are against the northern region while others argue that they would further impoverish Nigerians.

But to address these concerns, Tinubu has mandated the Justice Ministry to look into the concerns raised and work with the leadership of the National Assembly to finetune the rough edges in the bills.

“It is pertinent to state that the government has nothing sinister to warrant the suggestion that the process is being rushed. In line with the established legislative procedure, the Federal General welcomes meaningful inputs that can address whatever grey areas there may be in the bill,” the Minister of Information and National Orientation Mohammed Idris said in a Tuesday statement.

“In this vein, President Tinubu has already directed the Federal Ministry of Justice and relevant officials who worked on the drafts to work closely with the National Assembly to ensure that all genuine concerns have been addressed before the bills are passed.”

Explaining further its benefits to state governments on Wednesday, Ajayi said, “Human beings naturally resist change. When comfortable where we are, we find it extremely difficult to embrace an uncharted path or seek greater glory. Those who are risk averse often don’t want to venture out to embrace unfamiliar territories no matter how tempting the possible reward may appear. We should not, however, be so imprisoned by the fear of the unknown not to explore new possibilities because we find our present circumstances satisfying enough.

“Since the public debate around the Tax Reform Bills started, the strongest push back against it has come largely from the north. Borno State Governor, Professor Babagana Zulum has become the face of the resistance for the reasons he has pushed forward, even when some of them didn’t speak to the facts and provisions of the bills.

“If Governor Zulum and other voices of resistance who think the states will be shortchanged had actually taken time to examine the four executive Bills, they will see how progressive and transformative the Bills are. They will also discern the thought behind them which is primarily to make both the Federal and sub-nationals fiscally stronger and buoyant.

“In his public presentations and the most recent being the Channels TV Town Hall moderated by Seun Okinbaloye Monday evening, Chairman of Presidential Committee on Tax and Fiscal Policy Reforms, Taiwo Oyedele and other panelists again made convincing arguments for the passage of the Bills before the National Assembly,” he said.

In an explanatory statement, Ajayi listed the 10 ways the tax bills will serve the states better and enhance their capacity to earn more revenue as follows:

1. The federal government will cede 5% out of its current 15% share of VAT revenue to states.
2. The bills will transfer income from the Electronic Money Transfer levy exclusively to states as part of stamp duties.
3. The bills seek to repeal obsolete stamp duty laws and re-enactment of a simplified law to enhance the revenue for states.
4. Under the new dispensation, the tax bills will usher in, and states will be entitled to the tax of Limited Liability Partnerships.
5. When passed by the National Assembly, the tax bills will enable the state government to enjoy tax exemption on their bonds to be at par with federal government bonds.
6. Under the proposed tax reform, states will enjoy a more equitable model for VAT attribution and distribution that will lead to higher VAT income.
7. Integrated tax administration will provide tax intelligence to states, strengthen capacity development and collaboration, and scope of Tax Appeal Tribunal to cover taxpayer disputes on state taxes.
8. The proposed tax laws grant powers for the Accountant General of the Federation to deduct taxes unremitted by a government or MDA and pay to the beneficiary sub-national government on personal income tax of workers of federal institutions in states.
9. Framework to grant autonomy for states internal revenue service and enhanced Joint Revenue Board to promote collaborative fiscal federalism.
10. Legal framework for taxation of lottery and gaming and introduction of withholding tax for the benefit of states.

The statement added, “From the aforementioned, it is clear that the Tax Bills are not in any way injurious to the states. Apart from streamlining the tax system in Nigeria and catalysing economic output, the tax and fiscal policy reforms provide incentives for states to become economic powerhouses. The challenge for governors will be to put on their thinking cap by investing in manpower and critical social and physical infrastructure in their states that will support businesses and socio-economic activities to flourish.”