The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr Taiwo Oyedele, has said that Nigeria’s proposed tax reforms will create a simplified and transparent regime that will enhance the country’s appeal to both domestic and foreign investors.

Speaking at the Annual General Meeting of the Finance Correspondents Association of Nigeria in Abuja, Oyedele noted that the new tax structure would not only reduce the tax burden on businesses and households but also lower business risks and foster a more competitive environment.

He emphasised that a simplified tax system would drive industrial expansion and promote technological advancement.

“A transparent and simplified tax regime will position Nigeria as a more attractive destination for both domestic and foreign investment, fostering industrial expansion and technological advancement,” he said.

He said the tax reform bills, which are currently before the National Assembly, aim to stabilise the macroeconomic environment, improve revenue mobilisation, and enhance Nigeria’s credit rating, ultimately reducing the cost of government borrowing.

According to him, if these reforms are passed and implemented effectively, they would boost the nation’s tax-to-GDP ratio and create a healthier fiscal balance.

Oyedele pointed out that the government’s objective is not to impose new taxes or increase the financial burden on Nigerians but to ensure fairness and compliance within the tax system.

He stressed that broadening the tax base and curbing tax evasion would significantly increase government revenues, which would be channelled into critical sectors such as infrastructure, healthcare, and education.

“Revenue mobilisation for development through broadening the tax base and enhancing compliance is projected to significantly increase government revenues,” he said.

However, he noted that this development will not come from imposing more burdens on the people but by ensuring that everyone complies.

He argued that allowing tax evasion to persist is a disincentive to honest businesses and individuals who consistently fulfil their tax obligations.

“Allowing tax evasion to continue is itself a disincentive to the honest people who are doing their business and paying their taxes,” he said.

The proposed reforms, he added, also focus on promoting entrepreneurship by exempting small businesses from Company Income Tax, which would reduce financial pressure on emerging enterprises and encourage growth within the small and medium-sized enterprises sector.

Oyedele said the proposed tax structure would reduce inequality by ensuring that high-income earners contribute their fair share while providing incentives and exemptions to support vulnerable groups and small enterprises.

Addressing public concerns over the distribution of Value Added Tax revenue among states, he said the committee has been engaging with stakeholders to ensure transparency and fairness.

“We have been engaging and will continue to engage with our key stakeholders in this regard to ensure that all concerns are satisfactorily addressed in our collective interest,” he said.

He explained that the tax reform bills are specifically designed to reduce the burden on the Nigerian people, adding that measures have been incorporated to cushion the effects of VAT increases on low-income households through targeted tax reliefs and exemptions.

He urged all stakeholders, Nigerians, and friends of Nigeria to support the reforms, engage constructively, and collaborate to refine their implementation as the Committee works to establish a robust fiscal foundation for faster economic growth and development.

In his presentation, the Chief Economist at SPM Professionals, Dr Paul Alaje, noted that the proposed tax reforms have sparked several concerns, particularly regarding the planned increase in VAT rates from 10 per cent in 2025 to 12.5 per cent in 2026.

He said the increase in VAT has raised fears about exacerbating inflation but argued that the new tax reforms could improve compliance by capturing new sectors such as freelancers and self-employed individuals.

Alaje highlighted that adjusting the VAT revenue sharing formula to allocate funds based on consumption might favour economically robust southern states, potentially widening the economic gap with less developed northern regions.

He warned that this development could intensify regional inequalities and fuel socio-economic tensions.

He suggested that addressing these concerns through comprehensive stakeholder consultations and phased implementation strategies is crucial to ensuring the reforms achieve their intended economic benefits without unintended adverse effects.

According to him, the proposed reforms present an opportunity to modernise Nigeria’s tax system and boost overall economic efficiency, but the government must adopt a careful approach to avoid inflationary pressures and ensure that all regions benefit equitably.