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New tariffs, levies: Reps back Finance Bill

The House of Representatives has thrown its weight behind the Finance Bill which seeks a legislation to support the implementation of the 2022 budget. PHILIP NYAM writes on the import of the bill

The House of Representatives on Monday conducted a oneday public hearing on the 2021 Finance Act. The event was put together by the House Committee on Finance led by Hon. James Faleke (APC, Lagos). Although, the House was favourably disposed to passing the proposed legislation, which is an executive bill, the presentation by the Minister of Finance, Budget and National Planning, Hajia Zainab Ahmed, sent some shivers down the spines of not a few Nigerians. It would be recalled that President Muhammadu Buhari had on December 2, transmitted to the House, the 2021 Finance Bill, seeking the legislature’s speedy passage of the legislation to support the implementation of the N16.39 proposed budget.

Desirous to ensure the effective implementation of the budget, the House swiftly went to work and organised the public hearing to aggregate public opinion and the feeling of stakeholders on the bill. Stance of the House Presenting the position of the House in his speech to declare the public hearing open, Speaker Femi Gbajabiamila, said the 2021 Finance Bill seeks to introduce strategic and broadminded, positive reforms that will engender best practices and guarantee interest of the investing public and businesses. Represented by the minority leader, Hon. Ndudi Elumelu, Gbajabiamila said the bill seeks to statutorily check borrowing by local, states and federal governments, enhance transparency and accountability in the administration in various strata of tax and public revenue generation.

His words: “It is instructive to state that the essence of the 2021 bill is to further reposition our finance system to plug wastes, close openings for corruption, create opportunities for employment as well as stimulate stability and growth in our productive sectors, within the wider context of our quest for economic recovery in our country.

“Given the democratic credentials of the House of Representatives under my watch as well as the need to further deepen the credibility of the process through wider participation of stakeholders, this stakeholders meeting has been designed to give Nigerians and critical stakeholders in the industry the ample opportunity to own and drive the process.

“We must strengthen the institution to strategically check reckless borrowings by ensuring accountability in the use of borrowed funds and ensuring that the borrowings shall be on concessional terms or at relatively low interest rates and subject to the rigorous of legislation.’’

In his remarks, chairman of the House Committee on Finance, Faleke, noted that the proposed finance bill is geared towards supporting the economy and the implementation of the 2022 budget. Federal Govt’s stance One of the reasons advanced by the Federal Government for initiating the bill was the need for Nigeria to diversify its revenues from oil to other sources so as to fund critical expenditures, beginning from the 2022 fiscal year, according to the Minister for Finance, Budget and National Planning, who presented the position of the government.

The bill proposed key reforms to specific taxation, customs, excise, fiscal and other reIevant laws, specifically providing for enhanced domestic revenue mobilisatlon efforts to increase tax and non-tax revenues and tax administration and legislative drafting reforms, particularly to support the ongoing automation reforms by the Federal Inland Revenue Service (FIRS). According to the minister, the Federal Government’s retained revenue was N4.56 trillion (75 per cent of budget) as at September 2021; Federal share of oil revenues – N845 billion (56.3 per cent pro-rated performance); N1.31 trillion (117.3 per cent above budget) as federal share of non-oil revenues; N616 billion and N274.4 billion (121 per cent and 153 per cent of pro-rata targets) of Companies Income Tax (CIT) and Value Added Tax (VAT) and N418 billion Customs collections for the period under review.

She also told the lawmakers of the possibility of introducing new tariffs and levies in 2022 as the economy continues to recover, saying modest changes had been proposed but more fiscal reforms were still in view as the ministry could not take all the proposals collected from stakeholders. The minister further said that there are ongoing cases in court against the Federal Government on the Value Added Tax (VAT) and Stamp Duties which was why the ministry stayed off those areas. She, however, expressed hope that by mid-2022, the cases would have been dispensed with and then reforms in those areas could be proposed for parliament to consider.

“We prepared this draft bill along five reform areas, the first domestic revenue mobilisation, the second is tax administration and legislative drafting, third is International taxation, fourth is financial sector reforms and tax equity and fifth is improving public financial management reform. “The provision in the draft bill is proposing to amend the Capital Gains Tax Act, Company Income Tax, FIRS Establishment Act, Personal Income Tax, Stamp Duties Act and Tertiary Education Act, Value Added Tax, Insurance Police Trust Fund and the Fiscal Responsibility Act.

“This is to amend the Police Trust Fund Act and the Nigerian Trust Fund Acts, the purpose is to empower the FIRS to collect the Nigerian Trust Fund levies on companies on behalf of the fund itself. “Currently, because there is no such provision, the FIRS is unable to start collecting on behalf of the fund.

Also, it is to streamline the tax and the levy collection from the Nigerian companies in line with Mr. President’s administration ease of doing business policy. “So we do not have NASENI going out to collect that tax, the FIRS will collect on their behalf during their collection process and it will be passed through to them,” the Minister said. Position of FIRS While responding to the question from the chairman of the House Finance Committee, Faleke, on how the FIRS has been practicalising the Finance Bills, chairman of the Service, Muhammad Nami, said the total refund given to it from the federation account in the year is about N25 billion.

He said: “The challenge we have at hand is that if the proposals made by us is not considered, then the FIRS is now going to face a situation whereby, taxpayers will write to us to request for refund and I think, currently, the total refund given to us from the federation account in the year is about is about N25 billion.

“So far, if you has taxpayer who has already paid N25 billion as minimum tax, I’m just giving an example and you have some other taxpayers that are either wrongly or by mistakes or deliberately have paid VAT into another account or the tax belonging to Kaduna State for instance into FIRS, where do you get money to make refund to that person. “So, it is actually going to create slight administrative issues for us if the proposals made have taken and at the time there is legal implication because you don’t make law that we take retroactive effect.” How this bill, when eventually passes into law will impact on the economy and lives of Nigerians remained to be seen.

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