The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Taiwo Oyedele, has stated that the tax reform bills currently before the National Assembly are expected to be passed into law in the first quarter (Q1) of 2025, while the implementation will commence in July.
Oyedele also said his committee had no objection to the new value-added tax (VAT) sharing formula proposed by the Nigeria Governors’ Forum (NGF), declaring that the worst was behind Nigerians, with the good results being yielded by the ongoing economic reforms by President Bola Tinubu’s administration.
The tax expert stated these on Saturday while enlightening the audience on the benefits of the ongoing reforms on The Platform organised by the Covenant Nation in Lagos.
Oyedele, according to an online medium, noted that Nigeria was living in a window-dressed economy, printing money to spend before President Tinubu took over in May 2023.
According to him, the implementation of the tax reform bills is expected to commence in July.
“I need to talk about the tax reforms. Part of the expectation is: We expect the tax reforms to be approved, particularly the tax reform bills in 2025.
“Our expectation is before the end of Q1, and therefore, we can give notice to taxpayers to prepare themselves with capacity and begin to implement around July 1,” Oyedele explained.
While insisting that Tinubu’s economic reforms were yielding good results and that the worst was behind Nigerians, Oyedele emphasised that removing petrol subsidies was the best decision Nigeria ever made.
“Removing subsidies is the best decision we made as a country. And we can now say that for once, the subsidy is gone.
“We were living in window-dressed realities. If you look back to about two years ago, the naira exchange rate was N450 depending on who you asked. But was our exchange rate really N450? If you wanted to buy petrol, it was under N200 per litre, but was it really under N200 per litre?
“There wasn’t Band A at the time. Electricity was what it was at the time, but was that really the price? A country can afford to sell petrol at N200 per litre if you can afford it. But there is everything wrong if you cannot afford it.
“I am a parent and would like to send my kids to school. If I can afford a school of N200 million per term, no problem. But if I cannot, they will do just the first term and won’t be able to continue their education. Maybe they should go to a school for N200,000 per term.
“So, Nigeria was doing worse than it ought to, and then we had this sense of “our economy was not doing great”. We thought that our economy was the largest in Africa.
“Our GDP was around N450 million dollars. We thought our per capita income was about $2, 000 per person but it was not up to that.
“Nigeria used all its revenue to service debts. We were not paying debts back. We were just servicing it. Everything else we did, from paying salaries to fighting Boko Haram, we were just borrowing.
“When Nigeria borrowed, we borrowed at high digits and those were the funds we were using to run the economy and service debts.
“If anybody was not losing his sleep with just that alone, then, he must be from another planet. The outcome of what was happening was predictable. It was Sri Lanka happening to us. It was Venezuela.
“Their countries were that- you would hold money and you wouldn’t be able to get fuel to buy. There was a rule in Sri Lanka that you couldn’t drive your car every day of the week because there was no fuel.
“Our GDP growth rate was very low – over the past 10 years less than 10 per cent. If you do it in real-time, it was negative,” he added.
Oyedele explained that the Nigerian government had resorted to printing money to spend, which according to him was the worst any country could ever do.
“Ways and Means was high. We were printing money to spend. We couldn’t borrow abroad because they said lending us was risky. We didn’t have cash flow. And the capacity to borrow locally was low. So, we were printing money to spend, and that is even dangerous.
“We printed close to N40 trillion plus interest. And we were surprised there was inflation. Nigerians don’t realise that the invisible controls the visible. And that is because the removal of subsidies is not seen physically. It is not something you can touch.
“Even some airlines stopped flying to Nigeria because of the backlog of FX debts to foreign airlines,” Oyedele explained.
He advised Nigerians to have a positive outlook on the country.
“There is nothing wrong with Nigeria. But maybe there is something wrong with the people ruling Nigeria.
“In America, people get killed every day by gunmen. But have you ever heard Americans say “May America never happen to you?’
“Let’s stop saying ‘May Nigeria never happen to you’. Maybe we can turn it into “May Nigeria work for me”
“Going by available data, I personally believe that the worst is behind us,” he said.
Since assuming office in May 2023, President Tinubu has implemented some reforms such as the removal of fuel subsidies and introduction of the controversial tax bills.
Oyedele Says No Objection to Govs’ Proposed VAT Sharing Formula
Meanwhile, Oyedele has said his committee has no objection to the newly proposed VAT-sharing formula by the NGF.
After a meeting with the presidential committee on January 16, the NGF had proposed a revised formula of 50 per cent based on equality, 30 per cent on derivation, and 20 per cent based on population.
Addressing the decision of the NGF, Oyedele said reforms anywhere in the world are not just about what is technically correct, adding that political considerations are also factored in.
“You also need to consider other things, including political considerations, and so once the governors proposed their formula for sharing the VAT revenue,” he said.
“We have no objections to that, because, at the end of the day, if you need to move one kilometre, you don’t have to move all of that at once; you can’t even jump one kilometre at once.
“Maybe sometimes you need to just move gradually. You know, you take a breather. You reflect, have more data, and then you move again.”
According to Oyedele, the proposed VAT-sharing formula will affect all sectors of the economy.
“All sectors will be positively impacted, particularly agriculture and manufacturing, as well as industries generally,” he said.
“We also have a provision in those tax bills where we call them priority sectors. And there’s a priority sector incentive, you know, power generation, innovation.
“So, I’ll say, even if you’re not going to look at everything in that bill, go and find that section where we have those sectors.
“It’s a pointer to you about where the government wants to redirect the incentive regime.”