Finance Bill: Ahmed Hints at Introduction of New Taxes

Finance Bill: Ahmed Hints at Introduction of New Taxes

*Gbajabiamila says nill aimed at repositioning finance system to plug wastage

Adedayo Akinwale and Udora Orizu in Abuja

The Minister of Finance, Budget and National Planning, Zainab Ahmed, on Monday hinted that new taxes might be introduced in 2022 fiscal year as the economy was on the path of recovery.

Also the Speaker of the House of Representatives, Hon. Femi Gbajabiamila said that the 2021 Finance Bill was aimed at repositioning finance system to plug wastage.

Ahmed gave the hint during her presentation at a one day public hearing on the 2021 Finance Bill organized by the House Committee on Finance.

She noted that the Finance Act 2020 marked a very significant milestone, while also bringing the country’s legislation with global best practices and increasing revenue for the government.

She explained that the Finance Bill 2021 which was aimed at supporting the 2022 fiscal year, had extensive consultation done in February and April on the Bill.

She said the Bill was proposing to amend the Capital Gains Tax Act, Company Income Tax, FIRS Establishment Act, Personal Income Tax, Stamp Duties Act and Tertiary Education Act, Value Added Tax, Insurance Police Trust Fund and the Fiscal Responsibility Act.

This, according to her, is to amend the Police Trust Fund Act and the Nigerian Trust Fund Acts, to empower the FIRS to collect the Nigerian trust fund levies on companies on behalf of the fund itself.

She said that Nigeria must diversify its revenues from oil to fund critical expenditures, stressing that as of September 2021, the federal government’s retained revenue was N4.56 trillion, achieving 75% of the budget.

The Minister said that the federal share of oil revenue was N845 billion representing 56.3% pro-rated performance.

She also said that the federal share of non-oil revenues was N1.31 trillion, 117.3% above budget.

She pointed out that Companies Income Tax (CIT) and Value Added Tax (VAT) collections were N616 billion and N274.4 billion representing 121% and 153%, respectively, of the pro-rata targets.

Ahmed further said that Customs collections were N418.97 billion.

While noting that these issues may require modest increases in Taxes and Tariffs on certain businesses, sectors, industries and individuals over the medium term, she assured that the current administration remains committed to continuous dialogue and engagement with all stakeholders and interest groups particularly, the National Assembly.

According to her, “Clearly, our ongoing fiscal reforms of the last six years are yielding tangible results. However, the Federal Ministry of Finance Budget and National Planning is closely studying the following issues, developments and policies: Legal developments and pronouncement of the Courts on VAT vs. States Sales Taxes Cases. Current fiscal policy stance to let Tax Incentives with Sunset Provisions to naturally expire and not to automatically renew such Incentives without a detailed Tax Expenditure Cost / Benefit Evaluation of the relative success of the Incentives before extending Incentives further Acceleration of Projected Increase Tariff and Excise Duties (so called “sin classes”) on tobacco, alcohol & carbonated drinks to fund vital expenditure on Health, Education and Security. Wholesale reform of antiquated stamp duties and Capital Gains Tax Regime. Possibility of introduction of new taxes, tariffs and levies, as the economy recovers.

“We prepared this draft bill along five reform areas, the first domestic revenue mobilisation, the second is tax administration and legislative drafting, third is International taxation, fourth is financial sector reforms and tax equity and fifth is improving public financial management reform. The provision in the draft bill is proposing to amend the Capital Gains Tax Act, Company Income Tax, FIRS Establishment Act, Personal Income Tax, Stamp Duties Act and Tertiary Education Act, Value Added Tax, Insurance Police Trust Fund and the Fiscal Responsibility Act. This is to amend the Police Trust Fund Act and the Nigerian Trust Fund Acts, the purpose is to empower the FIRS to collect the Nigerian trust fund levies on companies on behalf of the fund itself. Currently, because there is no such provision, the FIRS is unable to start collecting on behalf of the fund. Also, it is to streamline the tax and the levy collection from the Nigerian companies in line with Mr President’s administration ease of doing business policy. So we do not have NASENI going out to collect that tax, the FIRS will collect on their behalf during their collection process and it will be passed through to them.”

Declaring the hearing open, the Speaker Gbajabiamila said that the essence of the 2021 Finance Bill was to further reposition the country’s finance system to plug wastes, close openings for corruption, as well as stimulate stability and growth in productive sectors.

He said the meeting was designed to give Nigerians and critical stakeholders in the industry the ample opportunity to own and drive the process.

Gbajabiamila also said that the Bill also seeks to introduce strategic and broadminded positive reforms that would engender best practices, statutorily check borrowing by local, states and federal governments.

He further said the Bill will enhance transparency and accountability in the administration in various strata of tax and public revenue generation, while at the same time guaranteeing the interest of the investing public and businesses.

Earlier in his remarks, the Chairman of the Committee, Hon. James Faleke said the Bill was geared towards assisting the economy to its feet as it always accompanies the budget to assist its implementation.

He urged the stakeholders to make and defend their presentations so it can become law.

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