The Nigerian Economic Summit Group (NESG), a prominent think tank, has expressed its disapproval of the Senate’s decision to suspend action on the controversial tax reform bills. Dr. Tayo Aduloju, CEO of NESG, argued that suspending the legislative process is counterproductive and that the Senate should instead continue with the public hearings and gather comprehensive feedback from all stakeholders across the country. He emphasized that while the bills may not be perfect, they represent a significant improvement over previous tax laws and deserve thorough consideration. Aduloju acknowledged the politically sensitive nature of taxation and the diverse concerns raised from different geopolitical zones, some technical and others stemming from perceived threats to existing revenue streams. He stressed, however, that the concerns should be addressed through the legislative process rather than by halting it.
Aduloju highlighted the importance of incorporating diverse perspectives in the legislative process. He explained that the NESG had engaged with a wide range of stakeholders, including academics, experts, market traders, and smallholder farmers, to ensure a comprehensive understanding of the potential impact of the proposed reforms. He further asserted that allowing the legislative process to continue would provide a platform for all these voices to be heard and considered. Aduloju acknowledged that issues related to federalism were at the heart of some of the concerns raised, emphasizing that these issues require a deeper examination separate from the specifics of the tax reform bills. Despite these concerns, he reiterated the NESG’s full support for the bills, believing they offer a significant step towards a more efficient and equitable tax system.
The proposed tax reforms, submitted by President Bola Tinubu in October, aim to modernize and streamline the Nigerian tax system. The bills include the Joint Revenue Board of Nigeria (Establishment) Bill, 2024; the Nigeria Revenue Service (Establishment) Bill, 2024; and the Nigeria Tax Bill, 2024. These bills aim to consolidate and strengthen revenue collection, improve tax administration, enhance transparency, and promote tax justice. However, they have sparked significant controversy and resistance, especially regarding the distribution of taxing powers between the federal and state governments. Some states express concerns about potential revenue losses and the encroachment on their autonomy.
The Senate’s decision to suspend action on the bills followed widespread public outcry and pressure from various interest groups. The Senate established a special committee to engage with the executive branch and address the concerns raised about the bills. While acknowledging the validity of some of the concerns, the NESG maintains that halting the legislative process is not the solution. The group advocates for a more constructive approach where the Senate continues to gather input from all stakeholders, including those with geopolitical concerns and those questioning the capacity of implementing institutions. A thorough assessment of the potential impact of the reforms is also deemed crucial.
Aduloju emphasized the need to move away from informal and often unauthorized tax collection practices, which are prevalent in many states. The proposed reforms seek to establish a more regulated and transparent system where only authorized revenue officers are allowed to collect taxes. This provision, while aimed at enhancing accountability and efficiency, has also generated resistance from some political leaders who benefit from the existing informal system. The NESG believes that embracing the reforms, despite the potential challenges, is essential for building a more robust and sustainable tax system that serves the interests of all Nigerians.
The NESG CEO also commented on Nigeria’s recent successful Eurobond issuance, which was oversubscribed, attracting $9.1 billion in bids. He attributed this success to the favorable terms offered to international investors and saw it as a sign of renewed confidence in the Nigerian economy. This success, however, underscores the importance of implementing sound fiscal policies, including the proposed tax reforms, to ensure long-term economic stability and sustainability. The NESG maintains that the tax reform bills, while not without their challenges, offer a pathway towards a more efficient and equitable tax system, which is crucial for driving economic growth and development in Nigeria. The group urges the Senate to resume the legislative process, address the concerns raised through constructive dialogue, and ensure that the final legislation reflects the best interests of all stakeholders.
