Presidential Committee Proposes Sweeping VAT Reforms to Protect the Poor
By Patience Ikpeme
In a bid to shield vulnerable segments of society from the burdens of taxation, the Presidential Committee on Fiscal Policy and Tax Reforms, led by Taiwo Oyedele, has put forward a comprehensive proposal urging the federal government to eliminate Value Added Tax (VAT) on an expanded array of essential goods and services, particularly those pertaining to food, education, and healthcare.
Speaking at a policy exposure and impact assessment session convened by the committee, Mr. Taiwo Oyedele explained the essence of the proposed reforms, emphasizing their pivotal role in alleviating the economic strain faced by the less privileged. He stated, “We discussed other proposals to reduce companies income tax rate, increase exemption threshold for personal income tax etc.”
The committee’s proposals extend beyond mere VAT exemptions, encompassing a multifaceted approach to revamping the fiscal landscape. Key elements of the proposal include granting businesses full input VAT credit, thereby mitigating their operational costs and bolstering liquidity.
Furthermore, the consolidation of all consumption taxes into a singular VAT regime aims to streamline taxation processes while optimizing revenue allocation to states.
One of the salient recommendations put forth by the committee involves abolishing VAT on the export of services and intellectual property, a measure expected to stimulate non-oil exports and foster economic diversification.
Moreover, plans to augment the VAT exemption threshold for small enterprises and refine the VAT refund mechanism underscore the committee’s commitment to fortifying the financial resilience of businesses, particularly in the face of operational constraints.
Addressing concerns surrounding tax evasion and compliance, the committee advocated for the implementation of VAT fiscalization and electronic invoicing measures to fortify regulatory oversight and promote a level playing field within the business sphere.
However, Mr. Oyedele was quick to state that these proposals are still subject to deliberation and refinement, declaring that, “The above proposals do not represent the position of the government but our committee’s proposals which we are still undergoing discussions with the private sector for their input.”
The impetus behind these proposed reforms lies in rectifying systemic inequities inherent in Nigeria’s current VAT framework. By alleviating the tax burden on businesses, particularly through the allowance of input VAT claims, the reforms aim to catalyze economic growth and foster a more inclusive fiscal environment.
