Tax Reform Bills: VAT Funds Will Be Transparently Managed – Oyedele

The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, has assured Nigerians that funds generated from Value Added Tax (VAT) under the proposed tax reform bills will be utilized responsibly and transparently.

Speaking at a one-day roundtable on tax reform bills hosted by the National Institute for Legislative and Democratic Studies (NILDS) in Abuja, Oyedele highlighted that the proposed bills include clear guidelines on how VAT proceeds should be allocated and spent.

“These reforms prioritize critical national needs such as education, healthcare, infrastructure, and poverty alleviation, avoiding wasteful spending on non-essential or impractical projects,” Oyedele stated.

He criticized past investments in projects such as underutilized airports, low-traffic flyovers, and unused malls while vital sectors like education and healthcare were overlooked. The new framework, he said, would ensure accountability and prevent governors or local authorities from mismanaging VAT funds.

The reforms also address other fiscal challenges, including borrowing and subsidy management. Oyedele questioned practices like borrowing foreign currency for domestic investments and subsidizing inefficient projects, which undermine fiscal sustainability.

Clarifying misconceptions, Oyedele noted that VAT is categorized as state revenue, not part of the federation’s general revenue. “VAT proceeds are shared among states and local governments through a special pool account, with the federal government retaining a small portion for administrative purposes,” he explained.

He also dismissed rumors that the Federal Inland Revenue Service (FIRS) would engage private tax consultants like Alpha Beta Company for VAT collection. The reforms, he emphasized, explicitly prohibit FIRS from outsourcing routine tax operations to consultants.

Senate President Godswill Akpabio described the tax reform bills as a vital step toward modernizing Nigeria’s tax system and promoting equitable distribution of tax burdens. While acknowledging some public concerns and political resistance, Akpabio affirmed that the reforms aim to create a robust fiscal framework to boost revenue and foster national prosperity.

“The National Assembly is committed to ensuring transparency and public trust in this process,” Akpabio said.

NILDS Director General, Professor Abubakar Suleiman, reiterated that the reforms seek to establish a fairer tax system, reduce the burden on ordinary citizens, and enhance accountability. “The ongoing debates reflect the public’s growing awareness of the need for a balanced and effective tax framework,” he added.

On October 3, 2024, President Bola Tinubu submitted four tax reform bills to the National Assembly, based on recommendations from the Presidential Committee on Fiscal and Tax Reforms. These bills include:

• Nigeria Tax Bill 2024: Establishing the fiscal framework for taxation.
• Tax Administration Bill: Simplifying tax processes and minimizing disputes.
• Nigeria Revenue Service Establishment Bill: Replacing the Federal Inland Revenue Service Act.
• Joint Revenue Board Establishment Bill: Introducing a tax tribunal and ombudsman.

Despite initial calls by the National Economic Council (NEC) for more consultations, President Tinubu has urged the legislative process to proceed while ensuring that public hearings allow citizens to contribute their input.