Chairman, Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, said under proposed personal income tax being sought through the proposed tax reforms, over 90 per cent of workers in the public and private sectors would pay lower taxes.

He added that the thresholds would result in over 90 per cent of workers in the public and private sectors paying lower taxes while high income earners would pay slightly more in a progressive manner up to 25 per cent for the ultra high net worth individuals.

Oyedele continued his interface with the public on Monday via his official X handle to further enlighten Nigerians about the key provisions contained in the Tax Reform Bills currently trailed by controversy.

He explained that the current personal income tax was introduced in 2011, adding that high inflation and lack of review resulted into “fiscal drag” where many low income earners have been pushed to the top tax bracket over time. “This means that an individual earning just N400,000 a month is paying the same top marginal income tax rate as a wealthy individual earning say N20 million per month.

“Therefore, the tax table has become regressive rather than progressive as it was originally designed. Also, the current personal income tax regime does not encourage formalisation given that the effective top tax rate on companies is nearly double that of enterprises, which also encourages arbitrage in some cases between the two income tax regimes.

“Hence, the proposed changes seek to address these issues and simplify the system by incorporating current reliefs and allowances into the bands and rates to achieve an overall lower effective tax rate for the majority of workers,” he said. He dismissed the perception that workers would pay more tax under the bills.

“This perception is not correct. Individuals earning about N1.7 million or less per month will pay lower PAYE tax under the bills while those earning the new minimum wage and slightly more will be fully exempted.

“These thresholds will result in over 90 per cent of workers in the public and private sectors paying lower taxes while high income earners will pay slightly more in a progressive manner up to 25 per cent for the ultra high net worth individuals.”