The Presidential Fiscal Policy and Tax Reforms Committee (PFPTRC) set up by President Tinubu has hinted of plans to revolutionise Nigeria’s tax system, exempting 95% of the informal sector from all taxes.
The Chairman of the Committee, Taiwo Oyedele, who disclosed this to newsmen at the weekend at the end of the close-out retreat of the PFPTRC in Abuja, stressed that the move was aimed at reducing the burden of multiple taxation on small businesses and low-income individuals.
He said the informal sector is populated by citizens working hard to earn a legitimate living, emphasizing that in the eye of the Committee, people in the category should not be over-burdened with taxation, but rather supported to grow economically to a point where they can fit into the more affluent categories before imposing taxes on them.
Taiwo Oyedele also explained that a lot was considered before the committee came up with the recommendation, noting the those who earn between ₦25 million and less annuallt should be expected from paying all forms of taxes, including income and value added tax (VAT).
According to him, the need for tax reform, saying, “Everybody, even if you’re not a business person, feels the impact of multiple taxation almost everywhere you turn. It affects small businesses even more than large businesses, and the poor and vulnerable population are having to deal with it.
“So we’re using data to inform our decisions, currently if you earn N25 million a year or less, you don’t have to pay company income tax, you don’t have to worry about VAT. We’re looking at increasing that significantly, first to recognize the inflation we’ve had to contend with over the past few years and also because we think that this whole idea and concept of “your money is in the informal sector” is not supported by data.
“We think that the informal sector are people who are trying to earn legitimate living, we should allow them be and support them to grow to a point where they can then have the ability to pay taxes. So we think that 95% of the informal sector should be legally exempted from all taxes; withholding tax, company income tax, even payee on their staff, let them be.
