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The House of Representatives has called for the removal of contentious clauses in the tax reform bills as the proposed legislation progressed to the second reading on Wednesday.
During the debate, lawmakers raised concerns over conflicts between some clauses and the 1999 Constitution, as well as ambiguities in the wording of the proposed tax reforms. The debate focused on the general principles of the bills, which were sent to the House by President Bola Ahmed Tinubu.
Despite the concerns, the House passed the tax reform bills for a second reading, aligning with the revised position of the Nigerian Governors’ Forum (NGF) on the VAT sharing formula and other disputed provisions. The passage followed extensive deliberations and the consolidation of four reform bills, led by House Leader, Prof. Julius Ihonvbere.
Lawmakers Raise Constitutional Concerns
Several lawmakers, particularly from the North, pointed out inconsistencies within the bills, emphasizing conflicts with the Constitution and the lack of interpretation clauses.
Rep. Sada Soli Jibia (APC, Katsina) acknowledged the bill’s potential to enhance tax efficiency and harmonization across government tiers but highlighted jurisdictional conflicts, particularly in Section 141, which contradicts the 1999 Constitution. He also noted overlaps with existing laws, such as the Personal Income Tax Act, Company Income Tax Act, and the FIRS Tax Act.
Similarly, Rep. Abubakar Hassan Fulata (APC, Jigawa) stressed that, apart from the tax administration section, the bills lacked interpretation clauses, leaving room for misinterpretation and potential abuse. He also called for the removal of clauses phasing out TetFund, NITDA, and NASENI, citing inconsistencies in Sections 197–2002.
He further criticized the amendment of 40 Acts without presenting them to parliament for scrutiny, raising concerns over potential double taxation in Section 38, where both buyers and sellers of property would be taxed.
Opposition to Inheritance Tax
Rep. Ahmed Jaha (APC, Borno) firmly opposed the proposed inheritance tax, arguing that it contradicts Islamic, Christian, and traditional beliefs. He emphasized that religious teachings universally protect inheritance rights and urged lawmakers to reconsider the provision.
House Adopts Governors’ Position on VAT
The House aligned with the NGF’s revised VAT sharing formula—50% based on equality, 30% on derivation, and 20% on population—contrary to the tax reform committee’s earlier proposal of 20% equality, 60% derivation, and 20% population.
Additionally, lawmakers agreed with governors on maintaining economic stability by avoiding VAT rate increases or Corporate Income Tax (CIT) reductions. They also opposed the removal of funding for TETFUND, NASENI, and NITDA.
The tax reform bills, now consolidated into a single legislative framework, will undergo further scrutiny. The four bills include:
- Nigeria Revenue Service (Establishment) Bill (repealing the Federal Inland Revenue Service Act)
- Joint Revenue Board & Tax Appeal Tribunal Bill
- Nigeria Tax Act Bill (consolidating various tax laws)
- Revenue Collection & Accounting Bill
Tax Reform to Boost Economic Growth
Lawmakers generally supported the reform, noting that it aims to modernize Nigeria’s tax system, harmonize multiple taxes, and provide exemptions for essential goods like food, healthcare, and education. House Minority Leader Kingsley Chinda and Rep. Abdussamad Dasuki (Sokoto) advocated for a VAT reduction from 7.5% to 3% to curb inflation and ease the financial burden on Nigerians.
Following extensive deliberations, the consolidated tax reform bills were passed for a second reading and referred to the House Committee on Finance for further legislative action.
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