Jude Diugwu
The Senate has passed two out of four tax reform bills, marking a significant milestone in the ongoing overhaul of the nation’s tax administration framework.
The two bills passed are the Nigeria Revenue Service Establishment Bill and the Joint Revenue Board Establishment Bill.
The lawmakers passed the bills following the consideration and adoption of recommendations contained in the Tax Reform Bills report which was submitted by its Committee on Finance led by Senator Sani Musa.
The apex legislative Assembly passed the two bills after clause by clause consideration of the report by the Committee of the Whole.
The Senate President, Godswill Akpabio, announced passage of the bills after a majority of the Senators supported the recommendations of the Committee to voice votes.
In the amendment to the Tax Administration Act, the Senate approved sharing of revenues generated from taxes among states and areas where goods and services are consumed, rather than where they are produced.
Also, in the new law, VAT revenue would be distributed as follows: 10% to the Federal Government, 55% to the States and the Federal Capital Territory, and 35% to Local Governments.
Among the states, the allocation would be based on equality (50%), population (20%), and place of consumption, that is, location of consumer at the time of consumption (30%). For Local Governments, 70% of the total allocation will be distributed using equality (30%) and the remainder based on population.
By this, the Senate replaced the term “derivation,” which refers to revenue allocation based on where resources are produced; with “place of consumption.”
The Senate also approved 2% service cost of collection.The collection fees accruing to the tax collection agency was reduced from 4% which was applicable for non-oil revenue to 2% based on the inclusion of oil revenues.
Senator Seriake Dickson, who raised a point of order for the amendment, noted that the 4% collection would make the funds accruing to the tax agency too much.
For the Nigeria Revenue Service Bill, the President shall act as Chairman of the Board while an Executive Vice Chairman, subject to Senate confirmation, would serve as head of the Service.
To promote inclusivity, the new bill provides that six Executive Directors be appointed—one from each geopolitical zone—on a rotational basis, with no Executive Director and Vice Chairman coming from the same state.
In his remarks, the President of the Senate, Godswill Akpabio, commended the Committee on Finance and Senators for a thorough job done.
He also expressed gratitude to the group of “elder senators” who collated and deliberated on areas of contention in the Tax Bills through meetings and consultation with dissenting voices.
Akpabio expressed optimism that the tax laws would revolutionalise and optimise tax collection across the country, saying that he was satisfied that the passage of the bills have dispelled rumours that they were meant to serve the interests of a part of the country, adding that all Nigerians would benefit from the new laws.
On his part, the Deputy President of the Senate, Sen. Barau Jibrin, congratulated the entire Senate and in particular the Committee on Finance and the Elders Committee for the wisdom and leadership that has been shown in the passage of the bills.
“Initially, there were disagreements and there were rancors here and there. But the Senate, standing on its position as the highest assembly in the land, decided to establish this committee, Committee of Elders (Special Committee), to look at all those areas of contention and hear the views of religious leaders, regional organisations and other stakeholders.”
