TUC seeks revisions to Tax Reform Bill

…applauds retention of VAT rate, TETFUND

By Ukpono Ukpong

The Trade Union Congress of Nigeria (TUC) has expressed its position on the Nigeria Tax Reform Bill, welcoming certain amendments while calling for further revisions to safeguard the economic well-being of Nigerians.

The position was contained in a statement signed by TUC President, Comrade Festus Osifo.

The TUC highlighted four areas of concern in the original bill: the proposed increment in Value Added Tax (VAT) from 7.5% to 15% over time; limiting tax exemptions to individuals earning ₦800,000 annually; the gradual defunding of TETFUND and NASENI; and transferring the collection of royalties in the oil and gas sector from the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) to the Nigeria Revenue Service (NRS).

The Congress welcomed the decision to retain the current VAT rate of 7.5%, describing it as a crucial step in mitigating the economic hardship faced by Nigerians.

“Allowing the Value Added Tax (VAT) rate to remain at 7.5% is in the best interest of the nation,” Osifo stated.

“At a time when inflation, unemployment, and the cost of living are rising, imposing higher taxes would further strain households and businesses, potentially slowing economic growth and reducing consumer purchasing power.”

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The TUC also expressed relief over the retention of TETFUND and NASENI, acknowledging their significant contributions to education and technological advancement.

“Both TETFUND and NASENI have been instrumental in improving tertiary education and fostering homegrown technologies. Their continued existence is vital for sustaining progress in education, technology, and economic development across the country,” the statement read.

However, the Congress emphasized the need for further adjustments to the Tax Reform Bill, particularly the threshold for tax exemptions.

“The threshold for tax exemptions should be increased from ₦800,000 per annum to ₦2,500,000 per annum. This will provide relief to struggling Nigerians within that income bracket, easing the excruciating economic challenges they face,” Osifo explained.

On the proposed transfer of royalty collection in the oil and gas sector to the NRS, the TUC raised significant concerns about potential revenue losses.

“Royalty determination and reconciliation require specialized technical expertise in oil and gas operations, which NUPRC possesses but NRS lacks,” the statement noted. It warned that this shift could lead to inefficiencies, regulatory burdens, and reduced investor confidence due to overlapping functions between the two agencies.

The Congress commended the inclusion of a derivation component in the VAT distribution formula, which it believes will incentivize productivity at the sub-national level.

“When properly implemented, this will encourage economic activities and gradually shift the nation from a rent-seeking economy to a derivation-based system,” Osifo remarked.

While appreciating the Federal Government’s efforts to address some of its advocacy points, the TUC reiterated its call for the unresolved issues to be addressed.

“We still advocate that the above concerns be considered and adopted in the Tax Reform Bill. They will be highly beneficial to both the government and the Nigerian populace,” the statement urged.

The TUC emphasized its commitment to promoting policies that improve the lives of Nigerians, especially workers.

“We have a shared responsibility to champion initiatives that enhance living conditions for our citizens,” Osifo said.

“Proactive measures, when implemented, are evidence of great and sincere leadership.”

The Congress cautioned that without adjustments, the Tax Reform Bill could exacerbate the economic challenges faced by Nigerians.

“The focus of the reforms must remain on equitable economic growth and improved living conditions for all Nigerians,” Osifo reiterated.

The TUC called on the National Assembly to critically examine the bill and ensure that it aligns with the broader objective of fostering economic stability and reducing the financial burden on citizens.

“The legislature must prioritize the welfare of Nigerians as they deliberate on this crucial legislation,” the statement said.

As the discourse around the Tax Reform Bill continues, the TUC pledged to remain vigilant and ensure that workers’ voices are heard.

“We will continue to engage constructively and advocate for measures that guarantee fairness and sustainability in Nigeria’s economic policies,” Osifo concluded.