Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, has revealed that over 90% of public and private sector workers will pay lower taxes if the proposed tax reforms pass.
Oyedele made this statement as part of his efforts to inform Nigerians about the upcoming changes. In October 2024, President Bola Tinubu introduced four tax reform bills aimed at restructuring Nigeria’s tax system. These bills seek to streamline tax administration, consolidate existing laws, and boost revenue generation.
Oyedele explained that the reforms would lower the personal income tax for those earning less than N1.7 million per month. People earning the new minimum wage and slightly more would pay no tax. This change would benefit most workers in Nigeria. However, high-income earners will pay slightly more taxes, with a progressive rate up to 25% for the wealthiest individuals.
He also noted that workers earning up to N1 million annually (about N83,000 monthly) would be exempt from taxes. The reforms aim to ensure that individuals earning slightly above the exemption threshold are not unfairly taxed.
The new system will fix the current problem of fiscal drag, Oyedele said. He pointed out that the outdated tax table, last updated in 2011, now unfairly taxes low-income earners at the same rate as the wealthy.
The reforms also propose raising the VAT rate from 7.5% to 10% by 2025. They would also impose a 5% excise duty on telecom services. Despite opposition, President Tinubu has confirmed that the tax reforms are final and will not be withdrawn.
These changes aim to simplify the tax system and ensure fairness for most Nigerian workers.
These changes are expected to simplify the tax system and benefit the majority of Nigerian workers while addressing long-standing issues of tax equity and efficiency.