Civil Society Organizations, CSOs, led by Civil Society Legislative Advocacy Centre, CISLAC, have called on the Federal Government to build fair and inclusive tax system that reflects alignment of fiscal policies
with equity and economic stabilization. The call is contained in a communique issued at the end of the National Tax Conference with the theme ‘Economic Stabilization for Equity: Ensuring Fairness in Fiscal Reforms’, held in Abuja. The Tax Conference is organized annually by the Tax Justice and Governance Platform, TJ&GP, comprising
19 state platforms and the steering committee members including Oxfam Nigeria, ActionAid, ChristianAid, the Nigerian Labour Congress, NLC, International Budget Partnership, IBP, Centre for Democracy and Development, CDD, and Civil Society Legislative Advocacy Centre, CISLAC. Some of the public sector institutions in attendance
included the Federal Ministry of Finance, the West Africa Tax Administration Forum, WATAF.
The communique raised concerns about key issues identified, including the timing of a VAT increase is considered problematic given the current inflation rate exceeding 30 per cent; The degree of involvement of all stakeholders in determining the classification of essential and non-essential items in the proposed VAT reform; The need for data-driven evidence to justify both the equity and benefits of the proposed VAT sharing formular across the different tiers of government; The need for the government to address the significant infrastructure gap in Nigeria; Review of the technical framework governing tax incentives and waivers and their effective administration to ensure that they are being utilized efficiently and contribute to the country’s economic development, and others. The communique read in part, “The 2024 National Tax Conference concluded with a united call for reforms that align fiscal policies
with equity and economic stabilization. “These recommendations underscore the collective effort needed to build a fair and inclusive tax system that fosters sustainable development and equitable
growth for all Nigerians.
“The tax system be made more progressive to ensure that all taxpayers, especially big businesses and high-net-worth individuals pay their fair share of taxes. The proposed Personal Income Tax (PIT) rate risks eroding the relative gains from the minimum wage increase, as most low-income earners would exceed the N800,000 annual threshold. Rather than raising the rate for the second bracket to 15%, we recommend capping it at 10%, considering the inflationary pressures on the cost of living in Nigeria. This income group is already taxed at a 7% PIT rate when adjusted for the real value of their earnings. To offset the potential revenue shortfall from this adjustment,we propose increasing the rates for the last income bracket (above 50 million Naira) to 26%.
“The Presidential Committee should make available to the public, detailed data on the current VAT compliance rate, highlighting challenges leading to underperformance, and proffering solutions for improvement. The National Assembly to ensure the passage of the sections of the proposed tax bill that aim to harmonise taxes and digitize tax administration. In anticipation of this, we urge the government to expedite the process of developing an effective implementation framework and ensuring its effective use. In collaboration with the Federal Inland Revenue Service (FIRS), the Presidential Committee should release a detailed framework outlining how VAT changes will be enforced, ensuring consistency and transparency across the system. Government should actively engage in public education and awareness campaigns to clarify the goals of fiscal reforms, focusing on fairness and equity. Provide platforms for wider citizens’ engagement in the reform process to ensure their concerns are addressed and integrated into final policies.
“A portion of the additional revenue should be redistributed to benefit the owner tax brackets and the most vulnerable populations (Women, Girls and Persons with Disabilities). Include clear indicators for tracking and monitoring gender inclusivity in the proposed fiscal policy and tax reform. Advise against increasing VAT rates during a period of high inflation, as it may exacerbate inflationary pressures and reduce the purchasing power of Nigerians. Review and expand the list of VAT exemptions to include all necessary items for basic living, such as energy sources (electricity, cooking gas, fuel) and food-related items, ensuring that they are accessible to all Nigerians. Tax expenditure should be subject to legislation to ensure cost effectiveness and established frame
