Tax reforms to ease hardship, lift income for over 90% of workers

BY TUNDE OPALANA

Nigeria’s tax reform bills, currently awaiting Senate approval, are poised to significantly boost disposable income, lower living costs, and protect low-income earners, according to the Presidential Committee on Fiscal Policy and Tax Reforms.

Chairman of the Committee, Dr. Taiwo Oyedele, said the bills—already passed by the House of Representatives—include key provisions that will exempt workers earning up to N1.3 million annually (about N100,000 monthly) from Pay As You Earn (PAYE) tax. The move is expected to directly benefit at least 35 per cent of Nigeria’s workforce across the public and private sectors.

In addition, workers earning up to N20 million annually (N1.7 million monthly) will also enjoy lower PAYE rates, impacting another 60 per cent of the employed population. Armed forces personnel will be fully exempted from PAYE, reinforcing state support for national security operatives.

The proposed tax changes also scrap Value Added Tax (VAT) on essential goods and services including food, healthcare, education, rent, transport, renewable energy, CNG, baby products, sanitary items, and fuel—together accounting for over 80 per cent of household consumption and nearly 100 per cent for low-income earners.

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“These reforms are targeted at improving the well-being of Nigerian workers and reducing the burden of inflation,” Oyedele said, stressing that the measures would ease cost-of-living pressure and promote financial stability.

The bills also provide tax relief on wage awards and transport subsidies for low-income earners, while eliminating red tape that previously slowed down salary reviews. A cap on taxable benefits-in-kind will ensure employees retain a larger portion of their earnings.

Housing is also a priority under the reforms, which propose VAT and stamp duty exemptions on rent and real estate transactions below N1 million, making homes more affordable.

To stimulate job creation, the new tax regime offers incentives for employers to hire more workers while easing the tax burden for companies involved in international remote work, positioning Nigeria as a global talent hub.

“These measures are in the best interest of Nigerian workers,” Oyedele noted, urging organised labour groups, including the Nigeria Labour Congress (NLC) and the Trade Union Congress (TUC), to support the reforms.

The comprehensive tax bills—first presented by the Executive in October 2024—have now completed their third reading in the House and await concurrence in the Senate before presidential assent.

Once signed into law, the reforms are expected to reposition the Nigerian economy, expand employment opportunities, and ensure a fairer, more resilient financial future for citizens.