The Minister of Finance, Zainab Ahmed has said that federal government will not be increasing or introducing a set of fresh taxes in 2021 but would be focusing on activities that will lessen the burden of taxation on Nigerians while also reflating the economy.
Ahmed made these distillations at a public hearing on the Finance Bill 2020 held on Friday by the House of Representatives Committee on Finance in Abuja.
According to her, Nigerians have had tough times, poignantly unleashed on them by the two incidences of Covid 19 pandemic and the concomitants fall of crude oil in the international market.
On a similar note, the Speaker of the House of Representatives, Femi Gbajabiamila while delivering his remarks at the hearing said that the bill was a home-made idea to fund the 2021 budget.
Ahmed said that bill centered largely on taxation and tax administration with comprehensive reforms aimed at exempting small companies from paying company income tax.
She added that about 1,740 persons representing various professional bodies, academics, International Development partners, civil society organisations, the private sector as well as key Federal Ministries, Departments, and Agencies made an input in the process of drafting the bill.
According to her, the draft bill was also roundly debated at the Federal Executive Council and the National Economic Council before it was transmitted to the National Assembly.
She said: “What we don’t have in the finance bill 2020 is an increase in tax. There are no new taxes that are being introduced and there is no increase in taxes. There are also no new incentives that have been introduced in this bill and will introduce tax reform that has been introduced is geared towards supporting financial stimulus while there are also tax measures that are short, focused, and uncontroversial.
“The bill also makes provisions to create a legal framework for the creation of a crisis intervention fund that will address crisis that may arise in future, while introducing provisions that allow for the recovery of donations made towards the Covid-19 pandemic and other potential crises. The minister also highlighted some of the rationale behind the drafting of the bill.
“We also need to defer tax rate increases to the domestic economic sufficiently recover and reduce the compliance burden on taxpayers in line with the ease of doing business reforms.
“The second principle is the need to reform fiscal incentives policies to help reduce proliferation of fiscal incentives by carefully assessing cost vs benefit of tax incentives and prioritize job creation, growth, and incentives.
“The government also needs closer coordination of monetary, trade, and fiscal. This is necessary so that government will be able to align existing tax incentives for lending to agriculture with the recent CBN moratorium and interest rate reduction for agriculture and real sector loans, reform the stamp duty level on banking transaction and make provisions that will help harness funds in form of unclaimed dividends and an unclaimed bank balance that has been sitting idle”, she said.
In his remarks, the Speaker of the House, Gbajabiamila said that though the bill was only transmitted to the House about one week ago, action will be expedited on it for early passage. He however added that it would not be at the expense of thorough scrutiny of the various clauses.
He said: “The Finance Bill, 2020 seeks to support the implementation of the 2021 Budget by proposing key reforms to specific taxation, customs, excise, fiscal and other laws.
“The Finance Bill which we have gathered here to consider and to contribute to will determine amongst other things, our ability as a nation to fund the 2021 budget, meet the obligations of government and implement policies to build infrastructure, address the problem of insecurity, grow the economy, and provide jobs that pay a living wage and lift families out of poverty.
“It is an important piece of legislation, deserving of thorough consideration, and reasoned debate by the parliament of the people, acting in the best interests of the people.
“We have a responsibility as legislators to meticulously review and examine every aspect of this Bill to ensure that we produce a legislative document that is clear in its objectives, thoughtful in the mandates it imposes, and reflective of the best aspirations of all our citizens.
“It is expected that over the course of this public hearing, citizens will advance ideas and make recommendations that will improve the quality of the legislation and ensure the varied interests and considerations of all Nigerians are taken into view before final enactment into law of this essential legislation.”
On his part, the Chairman, House Committee on Finance, Hon. James Faleke, said the proposed amendments to 18 tax-related and dividend laws were in line with the Legislative Agenda of the 9th House.
“The 9th House of Representatives in its legislative Agenda clearly identified as a priority to conduct a review of all Federal tax laws to encourage investment; to incentivise enterprise; ensure fairness and curb tax avoidance and evasion through the use of ICT in tax collection and administration.
“As encapsulated in the 9th House of Representatives Legislative Agenda, the priority economic strategic goals for the House of Representatives include: the creation of an inclusive, thriving and resilient economy for Nigerians, attainment of substantive reduction in the percentage of poor and unemployed Nigerians”, he said.
The bill when passed into law will also increase revenue for the government because it supports the increase of VAT from 5 to 7.5 percent and also introduces legislative backing for banks to charge stamp duties on electronic receipts.
