The Presidential Fiscal Policy and Tax Reforms Committee (PFPTRC) intended to exempt 95% of operators in the informal sector from any form of taxation.
The Taiwo Oyedele-led panel’s plan aims to reduce the burden of several taxes on small enterprises and low-income persons. Oyedele plummeted at the end of the PFPTRC’s close-out retreat in Abuja over the weekend.
According to him, the informal sector is filled by citizens who work hard to earn a respectable living, and the committee believes that persons in this group should not be taxed excessively.
He believes they should be encouraged to progress economically to the point where they can join the more affluent categories before taxes are imposed on them. The recommendation was made after careful deliberation.
Individuals earning ₦25 million or less per year should be exempt from all taxes, including income and VAT. Oyedele stated, “Everybody, even if you’re not a company owner, feels the impact of several taxes practically wherever you go.
“It has a greater impact on small firms than on large businesses, and the poor and vulnerable are particularly affected. “So we use data to influence our decisions; now, if you earn N25 million or less per year, you do not have to pay corporation income tax or VAT.
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“We’re considering increasing it significantly, first to recognise the inflation we’ve had to deal with in recent years, and second, because we believe that the entire premise and concept of ‘your money is in the informal sector’ is not supported by facts.
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“We believe that the informal sector is made up of people who are striving to make a respectable life; we should let them be and help them grow to the point where they can pay taxes. So we believe that 95% of the informal sector should be legally exempt from all taxes, including withholding tax, corporate income tax, and even payroll taxes on their employees.
“We can then narrow our focus to the top 5% of that industry, as well as the middle class and elites. We believe that the days of paying taxes without regard for the law have passed.
“The same thing we’re saying to our leaders, whether they are elected or appointed, we think they have to lead by example by showing that they have paid the taxes, not only on time, but correctly to the lawful authorities as contained in the various laws.”
According to him, the committee’s tax reform plan is likely to be submitted to the National Assembly by the third quarter of this year. Oyedele stated that the committee has completed the proposal phase and is now talking with the private sector, with internal clearances likely by the end of next month.
He stated that various executive orders and regulations, including a new withholding tax exemption for small firms, are ready for execution and are awaiting the minister’s signature. The reform panel chair stated that the new National Tax Policy, Spending Policy, and Borrowing Policy would be introduced by the end of the year, while Constitutional modifications are expected in 2025 and 2026, in accordance with the National Assembly’s two-year timeframe.
He stated, “We have just completed the proposal process, and we are already speaking with the commercial sector. That consultation is expected to continue for the remainder of this month, followed by internal approvals (whether FEC or NEC, or any other institution of government) until the end of June.
He stated: “We anticipate that by the third quarter, our documents will be ready for submission to the National Assembly, and by the end of that quarter, we should have them adopted into law, allowing us to provide reasonable notice to the public, businesses, and individuals before many of them begin in 2025.
“But where we have executive orders or directive regulations that do not require enactment into law, such as a new withholding tax regulation that exempts small businesses from having to deduct withholding tax, based on current law, you do not need to enact it into law; we simply need the Minister to sign. So it’s ready, and we’re waiting for the final signature.
“We also have a new National Tax Policy that explains the direction of our tax system and how we intend to spend our money. We also have a Spending Policy and a Borrowing Policy to ensure that the social compact with the people is fulfilled in a meaningful way.
“So, all of that will happen before the end of the year, but where we are enacting the law and proposals to amend the Constitution, will happen in 2025, and maybe 2026, in the case of the Constitution because I think the timeline that the National Assembly has is about two years.”
He stated that the administration is revamping the country’s tax structure with the goal of lessening the burden of many taxes on small firms and low-income citizens. Oyedele stated that, despite various taxes, the country’s tax collection as a percentage of GDP remains low. To solve this, the government aims to repeal many taxes, harmonise the remaining ones, and increase tax collecting efficiency.
(Nation)