Nigeria’s Senate on Thursday passed the Finance Bill for the third time.

The upper chamber of the National Assembly on Thursday passed the Finance Bill and raised Value Added Tax (VAT) from 5% to 7.5% amidst protests from some lawmakers.

The Senate passed the 56 amendments on the 2019 Finance Bill but some senators kicked against the increase in VAT during the presentation and consideration of the report of the Senate Committee on Finance.

The bill proposed an increment to Value Added Tax and some amendment to the fiscal laws to ensure adequate funding of the 2020 budget.

It would be recalled that the Finance Bill 2019 was submitted by President Muhammadu Buhari to the joint session of the National Assembly on October 14, 2019.

The bill, made up of seven components, includes the Companies Income Tax, Value Added Tax, Customs and Excise Tariff, Personal Income Tax, Capital Gains Tax, Stamp Duties and Petroleum Profit Tax.

The bill had proposed to introduce tax reforms which would help government achieve its revenue projections for the 2020 budget.

Some of the proposals in the bill include an increase in Value Added Tax (VAT) rate, moderation of inefficient and ineffective tax incentives, and closing loopholes in the existing tax laws that allow tax avoidance resulting in tax revenue leakages, among others.

Recall that the Senate Committee on Finance had conducted a public hearing to seek additional inputs of stakeholders to the bill following its seconding at plenary.

The objectives of the bill is to promote fiscal equity by mitigating instances of regressive tax invasion; reform domestic tax laws to align with global best practices, and introduce tax incentives for investment in infrastructure and capital markets.

It also seeks to support small businesses in line with the ongoing reform on the ease of doing business and raising of revenues for government by various fiscal measures, including a proposal to increase the rate of Value Added Tax from 5 percent to 7.5 percent.

In his presentation of the report, Chairman of the Committee, Olamilekan Adeola, said the bill specifically seeks to amend Nigeria’s tax provisions and make them more responsive to the tax policies of the Federal Government, among other things.

He added that the amendment and passage of the Finance Bill would enhance the implementation and effectiveness of government’s tax policies.

He said the initiative to reform the tax system and the proposed modifications to the fiscal rules around taxation are clearly aimed at creating an enabling business environment aimed at minimising the tax burden for Micro, Small and Medium Enterprises (MSMEs).

Adeola further said the Finance Bill, as amended, would promote fiscal equity by mitigating instances of regressive taxation, as well as introduce tax incentives for investment in infrastructure and capital markets.

Contributing to the report, Abdullahi Yahaya (APC-Kebbi) noted that the problem of revenue was a major issue in moving the economy of the country forward, urging the senators not to play politics with the economy.

He said it was a concern that Nigeria had not been able to raise revenue for implementation of its budgets over the years, adding that the senators should look at the Finance Bill 2018 dispassionately.

Abba Moro (PDP-Benue) said it was necessary for the Senate to revisit the clause on amendment of Value Added Tax (VAT), noting that the comparison of Nigeria with other developed nations as basis for the increase in VAT was not tenable.

He urged the Senate to be careful on the clause to increase VAT from 5 percent to 7.5 percent for the interest of Nigerians.

Orji Uzor Kalu (APC Abia), however, stated that the bill, which is about the Nigerian people, was not designed to tax the poor but luxury goods.

Gabriel Suswan (PDP-Benue) said some of the amendments sought in the bill would definitely affect Nigerians, urging the Federal Government to put in place a social safety net to mitigate the effect of the increase on VAT.

Ifeanyi Ubah (YPP, Anambra) said the amendment sought on the petroleum income tax would create additional challenges to stakeholders in the industry.

He said the petroleum industry was not growing the way it should, hence the amendment would pose additional challenges to the sector, adding that the industry players in the sector were not invited to make inputs to the bill.

Following debate on the report, the Senate resolved into the Committee of the Whole for a clause by clause consideration of the bill.

Following the unanimous affirmation of voice votes on the clause by clause consideration, the Finance Bill 2019 was passed after the Senate reverted to plenary.

In his remarks, after the clause-by-clause consideration of the bill, President of the Senate, Ahmad Lawan, said the bill passed by the Senate was intended “to ensure that we (the National Assembly) streamline the tax system in Nigeria and get revenue for government to provide services and infrastructure to the citizens of this country.

“What we have done is very significant because this is to ensure we not only have credible and reliable sources of funding for the 2020 budget, but also for subsequent activities of government.”

Get more stories like this on Twitter

AD: To get thousands of free final year project topics and other project materials sorted by subject to help with your research [click here]

More Stories