The Senate is set to pass the controversial Tax Reform Bill tomorrow, as gathered.
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This indication emerged from the Deputy President of the Senate, Senator Barau Jibrin (APC, Kano North), who presided over Wednesday’s plenary session. He confirmed that debate on the tax bills would continue today.
The bill will be listed for first reading, followed by an executive session, after which the Senate will expeditiously move to pass it after the third reading.
Earlier, on October 30, 2024, the Senate had listed the tax reform bills for first reading but stood it down along with other items for the screening and confirmation of Bianca Odinaka Odumegu Ojukwu and six other ministerial nominees appointed by President Bola Tinubu. The tax bills were then omitted from the Order Paper the following day, ahead of the Senate’s three-week recess.
However, during the plenary session on Wednesday, the Tax Reform Bill came up unexpectedly, triggering anger and a shouting match among lawmakers. The bill was not initially listed in the day’s business agenda, which caused tempers to flare.
The confrontation began after the Senators completed discussion on six items, including two bills that had passed the second reading and were referred to relevant committees. Senate Leader Senator Opeyemi Bamidele (APC, Ekiti Central) raised a point of order, citing Order 12(1) of the Senate Standing Order. He argued that experts on tax reform should be invited to provide clarity on the bills introduced by President Tinubu. These experts included Tanimu Yakubu, Director General of the Budget Office, Zacch Adedeji, Executive Chairman of the Federal Inland Revenue Service (FIRS), and Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms.
Senator Bamidele’s submission was supported by Senator Jibrin, and approval was granted for the experts to enter the chamber.
In response, former Deputy Senate Leader Abdul Ningi (PDP, Bauchi Central) raised objections, citing Order 12 of the Senate Standing Rules. He argued that there was no provision allowing non-Senators to speak during a session unless their subject matter was listed on the Order Paper.
Deputy President of the Senate, Senator Barau Jibrin, who presided over the session, ruled in favor of allowing the experts to speak, stating that their presence was to foster an open discussion on the matter.
This decision led to another outburst from former Senate Leader Senator Ali Ndume (APC, Borno South), who insisted that the Senate must follow the established procedures and that the matter was too important to bypass proper procedure. He argued that a supplementary Order Paper should reflect the inclusion of the tax experts. Ndume voiced his frustration, declaring, “You can have your way, but I will have my say.”
Eventually, Ndume was ruled out of order, and the invited experts were allowed to present their views on the Tax Reform Bill.
Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, presented the details of the bills, which aim to overhaul the tax system. Oyedele explained that the reform was not intended to tax poverty but prosperity, with a focus on correcting imbalances in tax distribution.
The proposed tax reform bills include:
The Nigerian Tax Bill, which aims to harmonize major taxes into one piece of legislation, simplify the tax process, and propose exemptions for low-income earners.
The Tax Administration Bill, which seeks to establish standards for tax administration, promote technology usage, and streamline tax collection.
The Nigerian Revenue Service Establishment Bill, which proposes the creation of a new revenue service to improve tax collection and coordination among agencies.
The Joint Revenue Board Establishment Bill, which aims to enhance collaboration among tax authorities and create a Tax Ombudsman to protect small businesses.
Key proposals in the bills include the elimination of minimum tax for loss-making companies, a 15% effective tax rate on large companies’ profits, removal of VAT on essential goods and services, and increased income tax thresholds for low-income earners.
On the contentious issue of VAT revenue sharing, Oyedele explained that the current formula was deemed unfair, as it disproportionately favored states with major corporate headquarters, such as Lagos. The proposed reform aims for a more equitable distribution based on consumption within states.
Additionally, the proposed bills would exempt Nigerians earning less than N1 million per month from paying personal income tax.
Oyedele emphasized that the bills were designed to radically transform Nigeria’s tax administration for greater efficiency, updating archaic tax laws and simplifying the complicated tax ecosystem. The reforms are particularly favorable to low-income earners and small businesses, which will be exempted from paying income tax. The bills are described as pro-poor, pro-growth, and pro-efficiency.
The committee urged Senators to support the passage of the bills to advance the country’s tax system.
Recall that on September 3, 2024, President Tinubu submitted the four tax reform bills to the National Assembly, following the recommendations of the Presidential Committee on Fiscal and Tax Reforms. These bills include the Nigerian Tax Bill 2024, the Tax Administration Bill, the Nigerian Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill.
Despite calls from the National Economic Council (NEC), chaired by Vice President Kashim Shettima, to withdraw the bills for wider consultation, President Tinubu responded on October 31, 2024, confirming that the bills should proceed through the required legislative processes. He assured that concerned Nigerians would have the opportunity to contribute their views during the public hearing stage.
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