Sections Of Tax Reform Bills Require Review Before Being Passed Into Law – Finance Expert

By Ayodele Oni

A Financial Consultant, Akin Omole has suggested a review of certain sections of the Tax Reform bills, now before the national assembly before they become law.

He pointed out that as a matter of fact a section of the bill, which addresses the Value Added Tax, (VAT) is not favourable to states in the north, which has apparently prompted their rejection.

Omole in a statement in Akure, Ondo state capital pointed out that “in view of this, I believe increasing derivation from the existing 20 percent to 35 or 40 could be fairer than the proposed 60 percent in the reform bill.

“The issue of the correct attribution of collections to where the economic activities takes place, as well as, using derivation as a key determinant in what accrues to each state of the federation, are steps in the right direction.

‎”However, in my view, the oppositions raised by notable voices from Northern Nigeria on this issue are not entirely unfounded, just that they seem to be too heavy on politics and rhetorics than offering credible basis for their opposition.

“Take for instance, every part of Nigeria have their areas of comparative advantage in terms of economic activities and contributions to the national economy.

“The North is predominantly heavy in agriculture and food production which unfortunately, are largely exempted from VAT, for the general benefit of all Nigerians.

“Therefore, increasing derivation to 60 percent, when you have exempted majority of their economic activities, is clearly placing the North at an unfairly disadvantaged position which the good side of proper attribution would not be able to cure.”

On Personal Income Tax, Omole, pointed out that the section if passed into law will be unfair to the middle class.

‎”Eliminating the erstwhile 20 percent Consolidated Relief Allowance and limiting rent allowance to 200,000 is very unfair to the middle class and high networth individuals.

“You cannot punish or penalize hard work and industry. Those who break into those realms in this difficult environment evidently  put in extraordinary diligence, discipline and hardwork and these shouldn’t be discouraged.

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‎”In addition, maintaining the high networth status would evidently require higher costs of living, which arguably sustains the level of income.

“For instance the neighborhood they live and their premium lifestyle are facilitators of the high income levels. Therefore, granting more less same reliefs across all income level is unfair and a disincentive.

“Proportinal consolidated reliefs should be maintained. The graduated rates and the enhanced income bands, with earnings of N800,000 or less exempted from PIT aren’t bad, but reliefs must be commensurate according to income bands.”

Omole however stated that “the antagonists of the bills, which unfortunately are mainly not rich in content and articulation, but largely based on brute politics, morbid fear of change, ethnic sentiments, distrust and suspicions.”