Musa: Why Senate Expunged Family Income Provision from Tax Reform Bills 

–     Says action taken after due consultations

Sunday Aborisade in Abuja

The Chairman, Senate Committee on Finance, Senator Sani Musa, has explained that the Family Income tax proposed in the landmark 2025 Tax Reform Bills which were passed at the Red Chamber last week, was expunged to avoid controversy.

Musa in an interview explained the issue generated a lot of arguments and controversies during the public hearing on the proposed fiscal legislation with a lot of interest groups, vehemently kicking against it.

He said: “We looked at the issue of family income or inheritance as some people choose to call it, which has created a lot of controversy and decided to expunge it.”

It will be recalled that Section 4(3) of the Nigeria Tax Bill submitted to the National Assembly by President Bola Tinubu, had provided for family income tax.

Defending the proposal then, the Chairman, Presidential Committee on Fiscal Policy and Tax Reforms, Prof. Taiwo Oyedele had said, “it is the income of a family recognised under any law or custom in Nigeria in which the several interests of individual members of the family cannot be separately determined.”

He had said: “Specifically, Section 4 of the Nigeria Tax Bill stipulates all incomes that are chargeable to tax. 

“Section 4(3) covers taxable income earned by a family, not their inheritance. 

“In the case of income of a family recognised under any law or custom in Nigeria as families’ income, in which the several interests of individual members of the family are indeterminate or uncertain, tax may be imposed only by the territory in which the member of that family who customarily receives that income in the first instance in Nigeria, usually resides.

“If an individual earns an income, they will be taxed accordingly. Where a group of individuals such as a partnership, community, or family jointly earn a taxable income, they cannot be exempted just because they operate as a group of persons. 

“The income will therefore be taxed in the hands of individual members where their respective shares can be determined otherwise the group will be collectively taxed. This ensures equity and prevents a potential loophole in the tax law.”

But Musa said the decision to expunge the controversial family income tax and other actions, were taken after series of consultations.

He said, “We had a public hearing and a retreat where we interacted with stakeholders and professionals.

“We had almost about 76 organisations that attended all our engagements. The Ulamas were not left out. The same thing with the Christian Association of Nigeria.

“The Islamic Sharia Council, the League of Imams and the civil society organisations, were well represented too.

“The organised private sector, operators of the oil and gas industries and the export processing zone operators made their presentations.

“After about a week of deliberations at the retreat, we sat and consulted with our consultants before the committee took the decisions that are contained in our report which was deliberated upon and passed by the Senate.”

The Senate had last week Wednesday and Thursday, passed the four tax reform bills including, The Nigerian Revenue Service Establishment Bill; the Nigerian Tax Administration Bill; the Joint Tax Board Establishment Bill, and the Nigerian Tax Bill. 

Musa had said that the objective of the bills was to streamline the nation’s tax administration, to make it possible that taxes and the operations meet international best practices. 

He said: “What we did is to look at these tax bills and do the needful, to see how there will be economic prosperity. 

“We all know that taxes are not enough to develop a nation but taxes are a very important segment to developing a nation, because without money, without prudence and justifiable source of revenue, we will not be able to fund appropriated projects.”

Musa said his committee considered how the country would coordinate the collection of the taxes.

He said: “You will agree with me that there have been so many leakages. MDAs will collect revenue and keep it. Some will not even declare it.

“But now, with this tax reform bill, we’ll be able to look at areas that will be able to use technology to get this revenue, at least reduce shortages to a minimum. And what is that? The single window. So I believe Nigerians will see something nice.”

He commended the president for the vision because some of the laws have been there for a very long time with nobody doing something about it.