In a bid to overhaul Nigeria’s fiscal landscape, Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, has revealed plans to propose a law to the National Assembly that would raise the Value Added Tax (VAT) from its current rate of 7.5% to 10%. This significant change is part of a broader strategy to streamline Nigeria’s tax system and increase government revenue.
During an appearance on Channels TV’s *Politics Today*, Oyedele outlined the committee’s comprehensive approach to addressing the nation’s fiscal challenges. “Our tax revenue system is currently in a state of crisis,” he stated. “We have major issues with both tax and non-tax revenue, and the entire fiscal system needs a complete overhaul.”
The committee has been tasked with three major mandates: to assess and improve governance relating to national finances, to transform revenue generation mechanisms, and to optimize the management of government assets. As part of these reforms, the proposed legislation seeks not only to increase VAT but also to simplify the tax structure by consolidating multiple taxes into fewer, more manageable levies.
Oyedele emphasized that while the VAT increase would bring in additional revenue, it would be accompanied by reductions in other taxes. “We are proposing a corresponding reduction in personal income tax, particularly for those earning N1.5 million or less per month,” he said. “Companies will also benefit from a reduction in the corporate income tax rate, which will decrease from 30% to 25% over the next two years.”
The proposed reforms also include the consolidation of various taxes such as the IT levy and education tax into a single tax. Initially set at 4%, this consolidated tax rate is expected to reduce to 2% in the coming years, further easing the tax burden on businesses and individuals.
The committee is keen to see these reforms implemented swiftly, though the timeline for the passage of the proposed legislation remains uncertain. “We are hopeful that the National Assembly will act quickly to pass this law, enabling us to kickstart the much-needed transformation of our fiscal policy,” Oyedele concluded.
This proposal is poised to ignite significant debate within the National Assembly and among the general public as Nigeria navigates its way through complex economic challenges.
