The tax reform process in Nigeria that began in July, 2024 appear to have been thoroughly debated and accepted by stake-holders across the six geopolitical zones of the country. Unlike the stance of many, especially the Northern governors and leaders from their areas, many of them are now convinced that the reform was not aimed at placing any region at an economic disadvantage, particularly with regards to Value-Added tax (VAT).
Remarkably, the tax reforms bill as presented by President Bola Ahmed Tinubu brought out the best in Nigerian legislators and concerned citizens as far as dialogue and structured debates are concerned. With the knowledge gained by the people from the submissions of those that cared to carefully study the content of the bill and its aims, the inhabitants of the nation can well be said to be ready to embrace the policy. But then, more still need to be done to ensure citizens’ full compliance with tax administration laws.
To begin with, many do not understand the need to responsibly embrace tax obligations without being forced so to do. This is why the government must commence their enlightenment programs on the matter as the date for the implementation approaches. The orientation agencies have duties to perform in this direction. The era where only paid salary earners, organized private sector and those requesting for attention from government are compelled to pay taxes should become a thing of the past.
Those paying their bills accordingly should enjoy the benefits of doing so. And these have to reflect on the number of projects executed with tax payers’ money. The level of governments’ deficit provisions in annual budgets must also reduce to the barest minimum with intention to equally reduce the temptation to borrow for the purpose of financing budgets.
Tax must be reasonable. Otherwise, it will encourage, not only evasion but also avoidance by many. Collectors of this must also be trained to be upright and not be given to embezzlement and other vices that are inimical to the economic growth of any nation.
As much as possible, appropriate technologies should be deployed into tax administration in order to strengthen the reliability of the process. It will also quicken the procedure for making the system work well.
One of the reasons behind the introduction of the bill is the nagging issue of multiple taxation. Since it aims at eliminating this, it behooves managers of the reform to ensure that only an all-inclusive tax is imposed on payers. When such obligations are fulfilled, it becomes logical to expect an equitable dispensing of the returns to cover all areas that require government funding through peoples’ financial contributions such as education, telecommunications, health and so on. These are areas that attract levies of all sorts from annual profits of organisations presently to fund. An example of such channels of funding is TETFUND (Tertiary Education Trust Fund).
Of all the areas that posed serious concerns to those that initially opposed the bill, the Value-Added Tax stood out as the most misunderstood. Now, that it has become clear that it is going to be based on place of consumption and not production, further steps must be taken to avoid the temptation of jacking it up from 7.5% to 10% as is being speculated today. This is because inflation has already taken care of the desired increase in VAT payment. It is a simple arithmetic!
Annual published accounts of the three tiers of government, detailing the internally-generated revenue, particularly tax-related ones must become a ritual performed for people to be kept abreast of their financial state of affairs.
In order to motivate obedient payers, appropriate sanctions must be meted out to defaulters. For this reason, dedicated revenue courts must be made to work effectively. Defaulters under trial must not wait for years for justice to take its full course.
On the final analysis, all areas of misunderstanding must continue to be identified and amended. Indeed, the green light is already on. As the reform vehicle moves, care must be taken to ensure that it does not collide carelessly with the peoples’ sources of livelihood.
As Nigerians await January, 2026 as commencement time for implementing the new tax reforms, it behooves the government to continue to educate the people on the usefulness of the law.
