May 26, 2024

Taiwo Oyedele’s Presidential Committee on tax reforms reveals FG plan to suspend VAT on diesel, address SDG-related fiscal concerns, ensure responsible energy transition  

President Bola Tinubu and Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms

Oredola Adeola
The Nigerian Government will suspend the 7.5 percent Value Added Tax (VAT) on diesel, comprehensively address fiscal concerns related to Sustainable Development Goals, ensure responsible energy transition, and entrench a coordinated strategy to elevate revenue reporting and quality of spending, Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms has revealed.

Oyedele, Chairman, Presidential Tax Committee made this offer in his speech during the inauguration of the Committee by President Bola Tinubu, at the state house in Abuja on Tuesday.

Earlier, President Bola Tinubu, while inaugurating Oyedele’s tax reform committee directed the Committee to achieve its one-year mandate, which is divided into three main areas: fiscal governance, tax reforms, and growth facilitation.

The President also directed all government ministries and departments to cooperate fully with the committee towards achieving their mandate.

President Tinubu told the Committee members the significance of their assignment, as his administration carries the burden of expectations from citizens who want their government to make their lives better. ‘

He said, ‘We cannot blame the people for expecting much from us. To whom much is given, much is expected.

”It is even more so when we campaigned on a promise of a better country anchored on our Renewed Hope Agenda. I have committed myself to use every minute I spend in this office to work to improve the quality of life of our people,” he declared.

Acknowledging Nigeria’s current international standing in the tax sector, the President said the nation is still facing challenges in areas such as ease of tax payment and its Tax-to-GDP ratio, which lags behind even Africa’s Continental average.

He said, “Our aim is to transform the tax system to support sustainable development while achieving a minimum of 18% tax-to-GDP ratio within the next three years.

”Without revenue, the government cannot provide adequate social services to the people it is entrusted to serve.

”The Committee, in the first instance, is expected to deliver a schedule of quick reforms that can be implemented within thirty days. Critical reform measures should be recommended within six months, and full implementation will take place within one calendar year,” the President directed.

Oyedele therefore commended President Tinubu for entrusting him and other eminent Nigerians with the privilege of serving our nation in this capacity, emphaising that the task before his committee is substantial yet pivotal.

According to him, we can respond swiftly to our most pressing needs including measures to ease the impact of rising prices (e.g. suspension of VAT on diesel), reduce pressure on the Naira (e.g. cease the payment of taxes and levies in foreign currencies), and amend the laws to encourage remote work opportunities and foster job growth in the digital economy, especially for our teeming youth.

Oyedele’s plan to suspend the imposition of Value Added Tax (VAT) on diesel, is a move aimed at alleviating the burden on businesses and consumers and creating a fairer tax system.

EnergyDay gathered that Nigerian Customs Service (NCS) and the Federal Inland Revenue Service (FIRS) in July, 2023, commenced the implementation of the 7.5% Value-added Tax (VAT) on diesel imported into Nigeria, after the process was agreed in June 2023, claiming that the petroleum product was not exempted from the payment of VAT based on the VAT Modification Order 2021.

Oyedele in his speech on Tuesday further affirmed that his committee’s approach will be comprehensive and long-term focused, addressing fiscal concerns related to Sustainable Development Goals and multi-dimensional poverty, ensuring responsible energy transition, and a coordinated strategy to elevate revenue reporting and quality of spending.

The former Africa tax leader at PricewaterhouseCoopers (PWC) said, “Nigeria’s fiscal policies could benefit from better crafting grounded in data and evidence, ensuring coherence and consistency. We need enhanced alignment with the modern economy and better coordination with monetary and other policies.

“Many of our existing laws are outdated, hence they require comprehensive updates to achieve harmonisation and address multiplicity of taxes, remove the burden on the poor and vulnerable while addressing the concerns of all investors, big or small.

“Our tax administration has improved but remains relatively basic, with instances of unregulated collections by untrained officers, particularly at the Local Government level, being widespread.

“Our revenue generation falls below even African standards, yet our collection costs are among the highest. This is due not only to multiple taxes but also numerous collection agencies and fragmented revenue reporting procedures.

Oyedele therefore noted that the public willingness to pay taxes is strained because of a lack of trust in government, both among individuals and businesses, irrespective of size. He added that the burden of tax falls heavily on those who comply, while those who evade often get away with little or no consequences. We need to change this.

He also noted that the process of resolving tax disputes is protracted and costly, with inadequate mechanisms for many small businesses and vulnerable individuals to seek fair tax resolution, as professional services are often beyond their means.

Chairman of the Committee, Oyedele, therefore, noted that although the challenges may seem daunting, he added that they also represent a unique opportunity for us to create a positive impact.

According to him, “We have the chance to revamp our tax policies for a more equitable system, modernize our laws to be adaptable and forward-looking, revitalize our revenue administration, enhance transparency in revenue reporting, and exercise prudence in our spending.

He said, “Empirical data affirms that Nigerians are willing to fulfill their tax obligations when they see meaningful returns on their tax contributions. We must therefore be intentional in renewing the social contract and, more importantly, act in the best interest of our nation.”