Chairman of the presidential committee on fiscal policy and tax reforms, Taiwo Oyedele has said Nigeria’s tax reforms remain incomplete without crucial adjustments, including lowering corporate tax rates and addressing regulatory overreach.
Oyedele on Saturday posted a lecture he gave at his 50th birthday on X, titled ‘Designing Tomorrow: Policy Blueprint and Lessons for the Future’.
He advocated for the corporate tax cut 10 days after President Bola Tinubu signed four new laws.
The laws are the Nigeria Tax Law, the Nigeria Tax Administration Law, the Nigeria Revenue Service (Establishment) Law, and the Joint Revenue Board (Establishment) Law.
Oyedele also advocated for further reforms to solidify the tax framework, attract investments, stimulate expansion, and stabilise the naira.
“The reforms are not done; we still have unfinished business. We need to lower corporate tax rates on businesses to attract more investments and stimulate expansion. With high inflation, a high tax rate will invariably be taxing capital, not profit,” Oyedele said.
“We must address regulatory overreach, embrace digitalisation, refine our tariffs system to reduce the rates on raw materials and intermediate products, which are currently twice the average for sub-Saharan Africa.
“Addressing our tariffs and regulatory hurdles is the equivalent of granting waivers from all income and consumption taxes. We also need fiscal reforms to complement a strong and stable Naira such as allowing payments of all taxes in Naira, and limiting discretionary forex demands.
“Despite having a comparable trade balance over the past 10 years as Kenya and South Africa, the Nigerian Naira has lost 6 times more value than either the South African Rand or the Kenyan Shillings.
“This means Nigeria would have been a one trillion dollar economy today, with much less poverty, expansive middle class, higher purchasing power, and moderate price increases (fuel, electricity, etc).”
Oyedele also asked policymakers to avoid crowd-pleasing analyses because “after the applause, the pain will remain”.
“The government should focus on doing only what the private sector will not do, and collect the least amount of tax in doing so without compromising the required minimum quality standards,” he said.
“The government should be intentional regarding non-inflationary spending, priority and quality of spending.
“The people must seek first to understand – ignorance compounds vulnerability, and steals opportunities. We must think independently, ask questions, engage and criticise constructively with the sole aim to build, not tear apart our country.“
Oyedele said beyond revenue generation, tax reform can help address some of Nigeria’s most pressing national challenges.
“Imagine a tax intelligent system, with a robust beneficial ownership law, unexplained wealth order, effective assets declaration system, conflict of interest reporting, and ensuring that rules for doing business with the government make sense – from procurement to contracting, payments, regulatory fees, and use of technology – will greatly reduce corruption and improve our society,” he said.
“Misinformation and lack of understanding were rampant. Some analysts and even tax professionals did not understand the difference between zero-rated and VAT exemption. Labour unions opposed the tax bills that would benefit workers most.”
Oyedele said the tax reforms focused on people, efficiency and growth, and the key changes include full income tax exemption for over one-third of all workers in the private and public sectors.
He also mentioned higher exemption thresholds for small businesses; changes to make essential consumption more affordable; reduction in input costs for businesses; simplifying and rationalising taxes; addressing distortions by creating a level playing field; priority sector incentives; boosting exports, and tax relief to prevent double taxation for international operations.
According to Oyedele, others are changes to income tax laws to attract remote work opportunities, enabling Nigerian youths to thrive in the digital economy; introduction of the tax ombudsman to advocate for a better tax system.
Also included is an attractive tax regime to encourage formalisation of businesses and facilitate growth; faster tax refunds and lower withholding tax rates to reduce the cost of working capital; making evasion more costly while simplifying compliance; improved accountability and reporting; more revenue and fairer treatment for sub-nationals.