Taiwo Oyedele, chairman of the presidential committee on fiscal policy and tax reforms, has announced the plan to increase personal income tax of Nigerians earning above N1.5 million under the new economic stabilisation bill.
Oyedele made this known in Abuja on Monday at the ongoing 30th Nigeria Economic Summit.
Speaking on the topic, ‘Fiscal & Monetary Policy Reforms; Removing Barriers to Private Sector Investment’, the tax committee chairman said people earning less than N1.5 million below would be exempted from the personal income tax (PIT).
He also said the wrong set of people have been taxed for so long.
“If you earn N1.5 million in a month or less, your personal income tax will go down. Of course, at the lower end, completely exempted. But if you earn more than that amount, you see it going up incrementally up to 25%,” he said.
“Today, if you earn N100 million in a month, nobody hates 19% effective personal income tax rate. We are taking that up to 25% of the ratio income. That’s because you need to balance people.”
On September 23, the federal executive council (FEC) approved the economic stabilisation bills seeking amendment of tax policies.
One of the bills offers tax relief to companies that generate incremental employment while another offers personal income relief to “people in private and public employment from N200,000 to N400,000”.
- FG Working On A System To Tax The Right People
Oyedele also said the federal government is working on developing a system to automatically get the right people to pay taxes rather than taxing low-income earners.
According to the tax expert, the wrong people have been paying taxes like those in the formal sector.
“One of our focuses is getting people to pay taxes, particularly people on the higher end,” he said.
“We discovered that about 90 percent of people who pay taxes have no business paying taxes.
“So we are developing a system that uses an ID using the national identity number for individuals, the RC number with CAC for businesses, and all economic activities will be linked to that ID.
“So when you declare your income, and it doesn’t correlate with your economic activity, you will have to reconcile that difference. Also, you must invoice everything you do using a system connected to the government.
“If you don’t, we’ll get the information from a third party, and each time you sell, the system monitors your inventory. So, the people who need to pay taxes will pay.”
Speaking also on the new gazetted withholding tax, Oyedele said the policies will enable manufacturers and small business operators to grow the economy, thereby increasing tax revenues for the government.
“We prioritised manufacturers and SMEs in our reforms. Now, there are no taxes on manufacturers anymore,” he added.
“When we withhold your income, and you’re borrowing at 35 percent, it means you’re funding the government at 35 percent.
“How do you grow? We’ve done the same for VAT, this allows their costs to go down.”
It was earlier reported that the national assembly is considering a bill proposing an increase in the value-added tax (VAT) from 7.5 percent to 10 percent.
