The Chairman of the Presidential Committee on Tax Policy and Fiscal Reforms, Taiwo Oyedele, has revealed that the committee is actively considering a range of strategies, including the broadening of income tax exemptions, as part of its efforts to alleviate financial hardship experienced by low-income earners.
Oyedele made this announcement during a special dinner organized in his honor by the Association of Chartered Certified Accountants, held in Lagos to celebrate his recent appointment.
Addressing the audience, he articulated the committee’s overarching objectives and commitment to easing the financial burden on individuals while establishing a framework for transparent and responsible use of tax revenues.
“We are dedicated to lightening the load on individuals while concurrently establishing a robust system for accountability, transparency, and prudent management of tax funds. Concurrently, our focus will be on aligning with Sustainable Development Goals, encompassing objectives such as eradicating hunger, enhancing access to clean water, boosting employment opportunities, elevating the quality of life, and more,” Oyedele stated.
Dividing the committee’s mandate into three distinct phases, Oyedele emphasized that the initial 30-day period will be devoted to realizing quick wins and making swift, actionable decisions that don’t necessitate altering existing legislation. Among the proposals under consideration, Oyedele shared that the committee is evaluating the possibility of removing Value Added Tax (VAT) from diesel to reduce costs, and also looking into expanding the scope of income tax exemptions. These measures are envisioned to ease financial burdens on the populace.
Rashidat Adebisi, the Chairperson of the Nigerian Advisory Committee of ACCA, as well as the Chief Client Officer of AXA Mansard Insurance, extended congratulations to Oyedele on his new role. She commended his exceptional competence and unwavering character.
In the context of Nigeria’s ongoing challenges related to revenue generation and taxation, Adebisi emphasized the necessity for the administration to enhance the current system. She underscored that a well-structured taxation framework not only ensures financial sustainability but also facilitates socio-economic growth and equitable wealth distribution.
As the Presidential Committee on Tax Policy and Fiscal Reforms moves forward with its multifaceted mission, its commitment to addressing the concerns of low-income earners and fostering a more efficient and transparent taxation system has sparked optimism among citizens. The potential expansion of income tax exemptions, among other strategic measures, holds the promise of alleviating economic strain and promoting a more equitable distribution of resources.
FG Pays N169.4 Billion for Subsidy in August to Keep Pump Price at N620/Litre
Amidst President Bola Ahmed Tinubu’s repeated assurances of subsidy removal, it has come to light that the Federal Government disbursed N169.4 billion as subsidy payments in August to maintain the pump price of petrol at N620 per litre.
This revelation has raised eyebrows and ignited discussions about the future of fuel subsidies in Nigeria.
Investigation, backed by a document from the Federal Account Allocation Committee (FAAC), reveals that the Nigerian Liquefied Natural Gas (NLNG) paid $275 million as dividends to Nigeria through NNPC Limited. Out of this, NNPC Limited allocated $220 million (equivalent to N169.4 billion at N770/$) to cover the Petroleum Motor Spirit (PMS) subsidy, keeping it artificially low.
This move effectively indicates a resurrection of the subsidy system, which the government had promised to eliminate.
Under former President Buhari’s administration, Nigeria saw record-high spending on petrol subsidies. Reports from the Nigeria Extractive Industries Transparency Initiative (NEITI) show that subsidies cost N1.99 trillion from 2015 to 2020.
In 2021 alone, NNPC reported a subsidy cost of N1.57 trillion, with an additional N1.27 trillion from January to May 2022. The government had allocated N3 trillion in the budget to cover subsidy costs from June 2022 to June 2023, amounting to N7.83 trillion spent on subsidies during Buhari’s tenure.
Global oil market dynamics are further complicating the subsidy issue. Brent crude prices exceeded $95 per barrel, while the naira depreciated against the US dollar, undermining Nigeria’s pledge to remove petrol subsidies.
Despite higher international crude prices and exchange rate pressures, the government has held the pump price at N620/litre.
The situation has also strained petroleum marketers, who face rising international prices, a weakening naira, and government-mandated price caps. International petrol prices, exchange rates, and additional costs have collectively driven up the landing cost of PMS to about N728.64 per litre.
The government’s strategy to sustain the N620 per litre price involved a $3 billion crude repayment loan with Afrexim Bank to bolster the naira. However, this loan has reportedly stalled due to the withdrawal of other lenders.
While the government claims the subsidy is a temporary measure to ease the economic burden on Nigerians, experts argue that it highlights the need for a functional refinery and currency stability.
Without these factors in place, petrol prices will remain susceptible to fluctuations in global oil markets and exchange rates, potentially impacting the masses.
The Federal Inland Revenue Service (FIRS) Reports Significant Growth in Nigeria’s Tax-to-GDP Ratio
The Federal Inland Revenue Service (FIRS) announced that it successfully increased Nigeria’s tax-to-Gross Domestic Product (GDP) ratio from 6.0 percent to 10.86 percent in 2022.
The revelation came during a sensitization program held yesterday in Lagos by the Director of Taxpayer Services at FIRS, Mrs. Saidatu Yero.
Mrs. Yero conveyed the agency’s commitment to further enhancing the nation’s tax-to-GDP ratio, with ambitious targets of 16.5 percent, aligning with the African average and subsequently aiming for 18 percent within the next three years.
Mrs. Yero proudly stated, “The FIRS Management has executed commendable reforms that have fundamentally transformed the landscape of tax administration in Nigeria, leading to a substantial increase in revenue collection for the government.”
The agency reported that its innovative measures have already culminated in the generation of N8.5 trillion as of September 14, 2023, demonstrating its unwavering commitment to achieving N12 trillion in revenue for the year 2023.
Elaborating further, Mrs. Yero said, “One of the primary objectives of the FIRS Management is to prioritize a ‘customer-centric’ approach, recognizing taxpayers as our key stakeholders within the tax ecosystem. To ensure that taxpayers comprehend their tax responsibilities and rights, it is imperative that we continuously inform, sensitize, engage, and educate them, facilitating their compliance without any hindrance.”
Addressing the event’s theme, “The Finance Act as an Innovation in the Nigerian Tax System,” Mr. Temitayo Orebajo, the Director of the Tax Policy and Advisory Department at FIRS, said that the 2023 Finance Act introduced substantial amendments to seven tax laws, four non-tax laws, and a total of 30 sections, signifying a significant leap forward in the country’s tax framework.
Euro-Area Inflation Eases, Fueling Debate on ECB’s Rate Hike Course
Revised Data Shows Modest Slowdown, But ECB Officials Divided on Further Hikes
In a surprising turn of events, revised data released today has revealed that inflation in the Eurozone moderated slightly in August, offering fresh fodder for the ongoing debate within the European Central Bank (ECB) on the necessity of further interest-rate hikes.
The latest figures show that consumer prices increased by 5.2% in August, down marginally from the initial reading of 5.3% while core inflation, excluding volatile elements like food and energy remained stable at 5.3%.
While the ECB recently raised the borrowing costs for the tenth consecutive time to 4%, the new data is reigniting discussions on whether this tightening cycle has concluded.
ECB Vice President Luis de Guindos, along with Madis Muller of Estonia and Peter Kazimir of Slovakia, have expressed their belief that the latest data supports the idea that no more interest-rate hikes are needed.
However, President Christine Lagarde has pushed back against such assumptions, and other hawkish officials from Austria, Latvia, and Slovenia argue that further moves may still be required to combat inflation effectively.
Economists, including Maeva Cousin of Bloomberg Economics, anticipate a marked deceleration in both headline and core inflation for September, potentially offering the ECB’s Governing Council the reassurance needed to assess whether the hiking cycle should indeed come to an end.
As Bank of France Governor Francois Villeroy de Galhau noted, the current rate is a “plateau,” and decisions will hinge on how inflation evolves as the economic “illness” diminishes.
In the face of these ongoing debates, patience remains key, with the ECB closely monitoring economic developments to determine the appropriate course of action for monetary policy.
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