Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has assured Nigerians that over 90% of workers in both the public and private sectors would benefit from reduced taxes if the proposed reforms are implemented.
Speaking on Monday via his X account, Oyedele highlighted the far-reaching impacts of the tax reforms introduced by President Bola Tinubu in October 2024. These reforms, encapsulated in four Tax Reform Bills—the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill—aim to consolidate tax laws, streamline administration, and enhance revenue generation.
Oyedele explained that individuals earning about ₦1.7 million or less monthly would pay lower Personal Income Tax under the reforms, while those earning the new minimum wage and slightly above would be exempt. He emphasized a progressive taxation structure, where ultra-high-income earners could pay up to 25% in taxes.
“Low-income earners will greatly benefit from these reforms,” Oyedele said, citing specific exemptions like the ₦800,000 annual tax-free allowance and a ₦200,000 rent relief. Together, these would exempt individuals earning up to ₦1 million annually (₦83,000 monthly). Additionally, measures have been introduced to ensure that minor income differences do not disproportionately affect net earnings.
The reform committee noted that Nigeria’s current tax brackets, introduced in 2011, have not been reviewed, resulting in fiscal drag. This has pushed many low-income earners into higher tax brackets, creating a regressive system.
“For instance, someone earning ₦400,000 monthly is taxed at the same rate as a person earning ₦20 million. The proposed changes will restore progressivity and simplify the system, making it fairer for the majority,” Oyedele stated.
Key elements of the reforms include raising the Value Added Tax (VAT) from 7.5% to 10% by 2025 and imposing a 5% excise duty on telecommunications services.
While the reforms have faced criticism from various stakeholders, President Tinubu has stood firm, declaring that the measures will not be withdrawn from the National Assembly despite opposition.
These reforms, if passed, promise significant tax relief for most Nigerians while addressing systemic inefficiencies in the country’s tax regime.
