TAX REFORM, STUDENTS AND TAX PRACTITIONERS

The tax reform will boost government revenue and create employment, argues KINGSLEY N. AYOZIE

In the contemporary world of today, we can attest to the fact that change is dynamic likewise reforms whether in the area of taxation and fiscal policy, monetary policy, banking, agriculture, healthcare, education to telecommunication.

The issue at stake lies in our collective will power to critically review any reform system with a forward looking and an objective mindset.

Interestingly, this article will focus majorly on the tax reform systems in Nigeria over the years ( pre & post independence era ) with a view to underscoring the possible benefits and drawbacks especially from the perspective of the student populace and the tax practitioners alike .

Evolution of Tax Reforms Systems in Nigeria:

The background information regarding Tax Reform System in Nigeria can be x-rayed from two angles such as: Pre-Independence tax period and post-Independence tax period.

§ Pre- Independence Tax Era: This period covered the pre-colonial era up to October 1st, 1960 when Nigeria got her independence. During this era, our local institutions were saddled with the responsibility for the collection of levies and other forms of revenue on behalf of the government of our time.

Worthy of note is that the colonial government did their utmost best in strengthening the process of collecting taxes by introducing the Native Revenue Ordinance of 1917 alongside the Direct Taxation Ordinance of 1940.

Post- Independence Tax Era: This period covered from October 1st 1960 till date.

We can all confirm that a lot of reforms have taken place within this period such as:

Tax Reform of 1978: This reform harmonized income tax in addition to introducing withholding tax.

 Tax Reform of 1993: This reform

saw the introduction of value added tax in addition to witnessed the repeal of the Sales Act of 1986.

National Tax Policy of 2012: This policy centered on providing a detailed structure for the administration of taxes in Nigeria.

National Tax Policy Review of 2017: This review emphasized more on promoting voluntary compliance on the part of the tax payers, increment in the tax base and dealing decisively with issues of leakages within the revenue collection process.

Finance Act of 2020: This reform witnessed among other things the increment in VAT rate from 5% to 7.5%.

It also provided for tax relief and other forms of incentives for small businesses operating here in Nigeria .

Presidential Fiscal Policy & Tax Reform Committee of 2023: This ongoing reform was meant to achieve numerous benefits which include but not limited to: reviewing and redesigning the Nigeria’s fiscal systems;

 harmonizing all the collectible levies and taxes across board; harmonizing all the multiple taxes within the Nigerian tax system; unifying revenue collection functions and mechanisms; and engaging in the harmonization of our collective tax systems.

Also the review committee after an extensive assignment, consultation and collaboration came up with the following tax reform bills numbering up to four : The Nigerian Tax Bill.

• The Nigerian Tax Administration Bill.

• The Nigerian Revenue Service Establishment Bill. The Joint Revenue Board Establishment Bill.

But what is tax reform?

Tax reform can be viewed as a holistic overhaul in the way and manner taxes are collected or managed by the government.

Purpose of Tax Reform: The objective of any tax reform can be identified as follows :

 to step up our tax administration procedure in order to be at par with global standard;

 to boost our revenue base for the government without jacking up the tax burden;

 to remove outdated laws and enact new ones that will be in tuned to current realities and developments within the business economy;

 to guarantee favourable business climate that will attract foreign direct invested (FDI) into our own economy; to make available economic and social benefits for the general masses and populace alike; to facilitate a simpler and fairer tax system; to further comply with global business trend.

Measures that will propel a meaningful tax reform system: Achieving a purposeful tax reform exercise will involve any or combination of the following measures: Improving on our tax administration; ensuring that our tax rate is adjusted; enacting business friendly tax legislations; promoting increment either in the tax base or tax net alike; consolidating of our taxes in fewer taxes

Benefits: Tax reforms of any kind attracts loads of benefits. One, it will boost government revenue as increase in the tax base will result to increase in tax revenue which will be used in the payment of workers (professionals) working for public entities

Two, the reform often times brings about the issue of employment generation for the masses of which the professionals and students will be among. Three, reforms of this kind may also result into a favourable business climate that may attract foreign direct investment (FDI) into economy thus assist in boosting economic growth that will be beneficial to both the professionals and to the students alike.

Four, Research & Development will be vigorously pursued in this light as professionals alongside the students will be desirous and anxious to more in this regard.

Five, the professional development of our professionals will be greatly sharpened or enhanced as new knowledge, skill, technique and expertise will be gathered in the area of tax collection and administration by our professionals and students alike.

Six, using the 2023 Tax reform as our case study, it provided for additional funding for the student’s loan scheme.

Remember that the TETfund Act provided for the deduction of 30% of revenue accruable to the agency to fund the newly established Nigerian Education Loan Fund ( NELFUND).

What this implies is that before TETfund disburse the amount in its fund, it shall set aside 1/3 of the amount to be transferred to NELFUND which happened to the official Federal Government Agency in charge of Student loan in Nigeria.

Interestingly NELFUND was established by President Bola Ahmed Tinubu on June 12th, 2023 through the Students Loan Act of 2023.

• To the nation at large, tax reform system can also bring about the promotion in fiscal stability, economic growth and development .

However, tax reform of any kind can manifest the following challenges or problems to us as nation: Higher taxes may arise due to the reform especially if the tax rate goes up, thus affecting the disposable income of both professionals and students.

• There is also the issue of unwilling and resistance to change by professionals and students alike with reference to issues connected and associated tax reform.

• In addition, we may also witness the insufficient manpower that will be capable to drive the process.

• There could also be the issue of limited tax awareness cum education in between the professionals to drive the process.

• Lack of publicity and awareness as regards the tax reform among students and professionals could also be a hindrance as they may not be able to drive the new process effectively well. We may also experience slow communication and learning skills of professionals and students not being desirous to learn about the new reform.

• Often times tax reform maybe occasioned by complexities and uncertainties with the new tax law.

 History was made on May 7th, 2025 when the Nigerian Senate passed into law two out of the four bills embedded under the 2023 reform system. It is our utmost desire that the outstanding two bills will also be passed into law thereby providing that needed friendly business climate that will make smaller businesses to flourish, in addition to attracting the bigger ones in the form of foreign direct investment ( FDI) into the country’s business climate in no distant time .

Let me charge us all to support this ongoing tax reform initiated by Mr President as its possible gains far outweighs the associated pains.

Dr Ayozie FCTI, FCA is a Public Affairs Analyst and a Chartered Accountant