Good morning, my dear brother. Against my better judgment (I don’t want to go on record) but on account of your clear position on the Tax Reform Bills, there are a couple of points for your consideration:
- Communication via public platforms is not the same thing as consultation. Feedback was not honestly taken on board and no changes were made to ideas that the committee came up with.
- The key provisions are not being discussed. VAT is a distraction and not an issue. At any rate, the sharing formula in the VAT Act (recall they were made by military fiat in the 90s) are not consistent with the Nigerian Constitution on sharing of fiscal revenues.
- The real challenge to VAT is the Constitution that does not vest taxing power on sales tax/VAT to the FGN. So, VAT may be unconstitutional. Obviously, a federal VAT is better for our economy. So, the committee should have pushed for constitutional reform.
- One of the key changes being pushed is the consolidation of revenue collecting powers. So, transferring power to collect, say, Customs Duty, to the FIRS (renamed NRS). That is a huge matter that has sociological and technical challenges. This has to be robustly debated.
- The new presumptive tax in place of minimum tax will negatively impact manufacturing companies further disincentising investment in Nigeria. There are provisions rolling back fiscal incentives to Free Trade Zone entities.
I don’t want this message to be too long. The point I’d like you to understand is that there are poison pills in the Bill and provisions that require robust engagement. However, most of the provisions of the Bills are logical and consistent with the direction of State Policy on fiscal matters and should be supported. I hope the Bill makes it through but I hope some of the poison pills can be addressed and mitigated.
