Presidential Committee Identifies Lower Tax burden, Reduced Business Risks, Others as Impacts of New Tax Reform.
The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Taiwo Oyedele, has identified Lower tax burden, reduced business risks, competitive tax regime on business and households as impacts of the proposed tax reforms by the Federal government.
Mr Oyedele stated this in his keynote address at the just concluded Annual General Meeting(AGM) of the Finance Correspondents Association of Nigeria (FICAN) held at the Federal Capital City of Abuja.
He noted that government will experience macro-economic stability, revenue mobilization, healthy fiscal balance, improved tax to GDP ratio, enhanced credit rating and lower cost of debts, if the proposed reforms which are already in form of bills before the parliament are passed and eventually signed by Mr President.
He said the ongoing tax reforms offer a healthy gateway to accelerate growth and development and have the potential to contribute to shared prosperity, especially if the nation’s tax base is broadened and tax compliance is enhanced by relevant authorities and stakeholders.
“Revenue mobilization for development through broadening the tax base and enhancing compliance is projected to significantly increase government revenues”, he said, adding that the development will not come from imposing more burdens on the people but by ensuring that everyone complies.
“Allowing tax evasion to continue is itself a disincentive to the honest people who are doing their business and paying their taxes,” Oyedele said.
He further explained that funds generated from taxes will provide the resources necessary for greater government investment in critical infrastructure, healthcare, education, and will form the pillars of economic growth going forward.
Furthermore, he advised “incentivizing entrepreneurship,” stating that exempting small businesses from Company Income Tax (CIT) will alleviate financial pressure and encourage the growth of SMEs, which are vital for job creation and innovation.
He also emphasized that boosting investor confidence is crucial in 2025 and beyond.
“A transparent and simplified tax regime will position Nigeria as a more attractive destination for both domestic and foreign investment, fostering industrial expansion and technological advancement,” Oyedele said.
He posited that the proposed tax structure will reduce inequality by ensuring that high-income earners contribute their fair share while providing incentives and exemptions to support vulnerable groups and small enterprises.
Speaking on concerns and controversies generated about the tax reform bills by certain members of the public and politicians, particularly regarding the “distribution of VAT revenue among states,” Oyedele responded: “We have been engaging and will continue to engage with our key stakeholders in this regard to ensure that all concerns are satisfactorily addressed in our collective interest.”
According to him, the contents of the tax reform bills are specifically designed to reduce the burden on the Nigerian people.
He added that suggestions have already been incorporated into the reforms to cushion the effects of VAT increases on low-income households, including targeted tax reliefs and exemptions.
He stressed that the tax reforms are not merely a technical exercise but a declaration of commitment to equity, efficiency, and economic transformation.
He urged all stakeholders, Nigerians, and friends of Nigeria to support the reforms, engage constructively, and collaborate to refine their implementation as the Committee lays a robust fiscal foundation that will empower Nigeria to achieve faster economic growth and development.
In his presentation at the occasion titled: “Tax Reform as a Pillar for Economic Prosperity; the Necessities and Concerns”, the Chief Economist at SPM Professionals, Dr Paul Alaje noted that the proposed tax reform bills have sparked several concerns saying that the planned increase in VAT rates from 10% in 2025 to 12.5% in 2026 has raised fears on exacerbating inflation.
He however posited that the new tax reform could Improve tax compliance via capturing of new sectors like the freelancing and self employed individuals.
According to him, adjusting the VAT revenue sharing formula to allocate funds based on consumption, may favour economically robust southern states potentially widening the economic gap with less developed northern regions. This development, Alaje said, could intensify regional inequalities and fuel socio-economic tensions.
He suggested that addressing these concerns through comprehensive stakeholder consultations and phased implementation strategies is crucial to ensure the reforms achieve their intended economic benefits without unintended adverse effects.
