There are hints that new taxes, tariffs and levies will be imposed on Nigerians by the federal government next year.
This is according to the Minister of Finance, Budget and National Planning, Zainab Ahmed, who made the disclosure at the ongoing fiscal reforms of the last six years were yielding tangible results.
Ahmed said the government was closing to study legal developments on the Value Added Tax (VAT) in the suit against it by the states to ascertain areas of taxes.
Ahmed’s remarks were contained in her presentation at a one-day public hearing on the 2021 Finance Bill organized by the House Committee on Finance of the House of Representatives.
The presentation came on a day the Speaker of the House of Representatives, Hon. Femi Gbajabiamila, said that reckless borrowings must be checked, adding that the 2021 Finance Bill was aimed at repositioning finance system to plug wastage.
Ahmed explained that the Finance Bill 2021 would support the 2022 fiscal year while adding that the Bill proposes to amend the Capital Gains Tax Act, Company Income Tax, FIRS Establishment Act, Personal Income Tax, Stamp Duties Act and Tertiary Education Act, Value Added Tax, Insurance Police Trust Fund and the Fiscal Responsibility Act.
It will also amend the Police Trust Fund Act and the Nigerian Trust Fund Acts to empower the FIRS to collect the Nigerian trust fund levies on companies on behalf of the fund itself.
While hinting on the need to diversify the oil economy, Ahmed stated that as of September 2021, the federal government’s retained revenue was N4.56 trillion, achieving 75% of the budget.
She added that the federal share of oil revenue was N845 billion representing 56.3% pro-rated performance.The federal share of non-oil revenues, she said was N1.31 trillion, 117.3% above budget.
She pointed out that Companies Income Tax (CIT) and Value Added Tax (VAT) collections were N616 billion and N274.4 billion representing 121% and 153%, respectively, of the pro-rata targets.Nigerian Customs Services collections, the minister said, were N418.97 billion.
She said: “Clearly, our ongoing fiscal reforms of the last six years are yielding tangible results. However, the Federal Ministry of Finance, Budget and National Planning is closely studying the following issues, developments and policies: Legal developments and pronouncement of the Courts on VAT vs. States Sales Taxes Cases.
“Current fiscal policy stance to let tax incentives with sunset provisions to naturally expire and not to automatically renew such incentives without a detailed tax expenditure cost/benefit evaluation of the relative success of the incentives before extending incentives further acceleration of projected increase tariff and excise duties (so called “sin classes”) on tobacco, alcohol & carbonated drinks to fund vital expenditure on health, education and security.
“Wholesale reform of antiquated stamp duties and capital gains tax regime . Possibility of introduction of new taxes, tariffs and levies, as the economy recovers.
“We prepared this draft bill along five reform areas, the first domestic revenue mobilization, the second is tax administration and legislative drafting, third is international taxation, fourth is financial sector reforms and tax equity and fifth is improving public financial management reform.
“The provision in the draft bill is proposing to amend the Capital Gains Tax Act, Company Income Tax, FIRS Establishment Act, Personal Income Tax, Stamp Duties Act and Tertiary Education Act, Value Added Tax, Insurance Police Trust Fund and the Fiscal Responsibility Act. This is to amend the Police Trust Fund Act and the Nigerian Trust Fund Acts, the purpose is to empower the FIRS to collect the Nigerian trust fund levies on companies on behalf of the fund itself.
“Currently, because there is no such provision, the FIRS is unable to start collecting on behalf of the fund. Also, it is to streamline the tax and the levy collection from the Nigerian companies in line with Mr President’s administration ease of doing business policy. So, we do not have NASENI going out to collect that tax, the FIRS will collect on their behalf during their collection process and it will be passed through to them.”
Earlier in his address, while declaring the hearing open, the Speaker of the House, Gbajabiamila, said that reckless borrowings must be checked by ensuring accountability.
He added that the bill will help plug the financial loopholes to stop wastages.
“Broadly speaking this bill seeks strategic amendments to certain operational provisions of the Capital Gains Act, the Companies Income Tax Act, the Federal Inland Revenue Act, Personal Income Tax Act, Stamp Duties Act, Tertiary Education Trust Fund (Establishment Act), Value Added Tax Act, Insurance Act, Nigerian Police Trust Fund (Establishment Act) National Agency for Science and Engineering Infrastructure Act, Finance Control and Management Act and Fiscal Responsibility Act and for related matters.
“Essentially the 2021 Finance Bill seeks to introduce strategic and broadminded, positive reforms that will engender best practices, statutorily check borrowing by local, States and Federal Government, enhance transparency and accountability in the administration in various strata of tax and public revenue generation, while at the same time guaranteeing the interest of the investing public and businesses.
“It is instructive to state that the essence of the 2021 bill is to further reposition our finance system to plug wastes, close openings for corruption, create opportunities for employment as well as stimulate stability and growth in our productive sectors, within the wider context of our quest for economic recovery in our country.
“Given the democratic credentials of the House of Representatives under my watch as well as the need to further deepen the credibility of the process through wider participation of stakeholders, this stakeholders meeting has been designed to give Nigerians and critical stakeholders in the industry the ample opportunity to own and drive the process.
“It is on this backdrop that I charge this stakeholders meeting to extensively scrutinize the templates in the bill in the general interest. We must strengthen the institution to strategically check reckless borrowings by ensuring accountability in the use of borrowed funds and ensuring that the borrowings shall be on concessional terms or at relatively low interest rates and subject to the rigours of legislations.
“The stakeholders should also consider the issues of chargeable gains as they affect individuals and companies in some of the proposed laws so that we will achieve our aim to enhance transparency, accountability as well as engender a credible and favourable business environment for growth in our economic productivity”, Gbajabiamila said.
In his welcome speech earlier also, the Chairman of the Committee, Hon. James Faleke, expressed hope that the bill would help to rebound the economy.
