The Chairman, Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, has said all tiers of government currently have immense potential to optimise revenues to enhance their fiscal conditions.
Oyedele made this remarks same day the Nigerian Supreme Council for Islamic Affairs (NSCIA) made recommendations to the Tax Reforms Bill before the National Assembly via a memorandum submitted to the Senate Committee on Finance.
Oyedele spoke at the 2025 Finance Correspondents Association of Nigeria (FICAN) conference, with the theme, “Tax Reforms as Pillar for Nigeria’s Economic Prosperity” in Abuja.
According to Oyedele, 85% of major revenue sources in the country belong to sub-national governments, adding that the calls to allocate more resources to states do not currently hold water.
He allayed concerns by state governments, that exempting small businesses from taxes as proposed in the Tax Amendment Bills before the National Assembly, would lead to loss of revenue streams at the sub-national level.
Oyedele said the total taxes currently collected from small businesses are insignificant compared to tax opportunities which the sub-nationals have left untapped.
He said even though the personal income, property taxes, stamp duties, VAT (excluding FCT), and land all belong nearly 100 percent to States and Local Governments Areas – these have not been effectively harnessed.
He clarified that FAAC was not a federal allocation, but federation revenue belonging to all tiers of government.
He said all revenues and resources needed to be optimised, particularly the personal income tax which is less than 10 percent total tax in Nigeria, compared to 30 percent globally.
He said responsibilities and revenues should match, adding that citizens’ participation remained critical while reforms must be people-centric.
Among other things, he said, “We must urgently address multiple taxation and multiplicity of taxing agencies.
“We need budgetary reforms, robust accountability, and transparency.”
The presidential tax reforms chairman said the proposed tax reforms would facilitate economic growth, competitiveness, shared prosperity, and revenue mobilisation.
He said the reforms would reduce business risks, lower tax burden, reduce tax rates, and tax payments in Naira as well as usher in an era of tax refunds among other benefits.
He said the proposed tax regime would address distortions in the incentives regime, and free zones as well as ensure equity and fairness between governments and taxpayers.
He said the reforms would also profit the small business regime and start-ups, including remote jobs, aid macroeconomic stability and economic growth
Also speaking at the conference, Senior Partner SPM Professionals, Dr. Paul Alaje, pointed out that the proposed tax reform bills had sparked several concerns.
He said the planned increase in VAT rates, rising from 10 percent in 2025 to 12.5 percent by 2026, had raised fears of exacerbating inflationary pressures.
He said, “The new tax reform could improve tax compliance via capturing of new sectors like the freelancing and self-employed individuals. “Some who oppose greater VAT contend that it might result in higher pricing for products and services, which would adversely affect low-income people and possibly curb consumer spending.”
He also said adjusting the VAT revenue-sharing formula to allocate funds based on consumption may favour economically robust southern states, potentially widening the economic gap with less developed northern regions.
He added that this shift could intensify existing regional inequalities and fuel socio-economic tensions.
He said, “Insufficient preparation could lead to compliance issues and administrative inefficiencies, undermining the reform’s objectives.
“While the reforms propose tax exemptions for small enterprises, the overall increase in VAT and potential changes in tax administration may inadvertently impose additional operational burdens on these businesses, affecting their profitability and sustainability.
“Addressing these concerns through comprehensive stakeholder consultations and phased implementation strategies is crucial to ensure the reforms achieve their intended economic benefits without unintended adverse effects.”
Meanwhile, the NSCIA has made recommendations to the Tax Reforms Bill before the National Assembly via a memorandum submitted to the Senate Committee on Finance.
The NSCIA, under the leadership of its President-General, the Sultan of Sokoto, His Eminence, Alh. Muhammad Sa’ad Abubakar, being the apex Islamic body in Nigeria and superintending over the affairs of Islam and Muslims in the country, said it got to know about the public hearing through a media item on Monday.
NSCIA in the memorandum said the lack of prior notice created a constraint in making any submission before yesterday.
The Memorandum read: “Meanwhile, considering the importance of the Bills in question to Nigerians, particularly the Muslim Ummah, we hereby make the following recommendations.
“The NSCIA, as the representative of all Muslims from all parts of the country, recommends that all the major technical and political-socio issues raised by different sections and segments of the country should be diligently considered equitably addressed to the satisfaction of almost, if not, all segments of the country.
“The 1999 Constitution of the Federal Republic of Nigeria (as amended) provides for the establishment of Shariah Court of Appeal for Muslim personal laws which include marriage and inheritance.
“Therefore, all sections of the Bills that may directly or indirectly impugn the law on Shariah would be unconstitutional and should therefore be removed.
“The term ‘ecclesiastical’ used in a section of the Bills should be changed to ‘religious’ in other not to give the impression that it excluded some religious group.”
The NSCIA pointed out that considering all the above, it recommends the passage of the Bills, adding that it remains committed to constructive engagement in national policy formulation and legislative reforms.
