Home Latest Insights | News Nigerian Tax Committee Proposes Removal of Taxes on Food, Public Transportation, and Housing to Ease Economic Burden

Nigerian Tax Committee Proposes Removal of Taxes on Food, Public Transportation, and Housing to Ease Economic Burden

Nigerian Tax Committee Proposes Removal of Taxes on Food, Public Transportation, and Housing to Ease Economic Burden

In a move to alleviate the economic pressures faced by millions of Nigerians, the Presidential Committee on Fiscal Policy, chaired by Taiwo Oyedele, has proposed sweeping tax reforms aimed at removing taxes on essential goods and services critical to the well-being of the populace.

This proposal, shared by Oyedele during an interview with Channels TV in Abuja on Monday, marks a critical step in the federal government’s broader effort to create a more equitable and sustainable economic framework.

Key Components of the Proposal

The committee’s recommendations include the removal of all taxes on food, public transportation, and housing—items deemed essential for everyday living. These measures are intended to directly benefit low- and middle-income Nigerians, who have been disproportionately affected by the country’s economic challenges, including rising inflation and the removal of fuel subsidies.

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A particularly notable aspect of the proposal is the exemption of Value-Added Tax (VAT) on these basic necessities. Oyedele emphasized that this approach is designed to ensure that the cost of living is more manageable for the average Nigerian.

“What we have taken into account is what are those basic necessities of life—food, accommodations, transportation, education, and health. We’ve deliberately identified those items. And we’ve removed almost all the taxes applicable to them, including no VAT,” Oyedele explained.

He further clarified that while certain forms of public transportation, such as shared passenger buses, will be entirely tax-free, services that cater to more affluent individuals, like private taxi hires, will still attract taxes. “If you hire a taxi, we assume that you’re not the poorest Nigerian, so you have to pay the tax. Whereas if you get into a bus, that will be completely tax-free,” Oyedele noted.

The Federal Government had earlier directed the Nigerian Customs Service (NCS) to remove import duties on select food items and other essential goods, including medicines.

Job Creation Incentives

In addition to alleviating the tax burden on basic necessities, the committee has also put forward proposals aimed at stimulating job creation within the private sector. One of the key recommendations is offering tax exemptions to companies that significantly increase their workforce. This policy is designed to encourage businesses to expand their operations and hire more workers, thereby addressing the high unemployment rate in the country.

“We’ve also developed some proposals where the government can give relief to private sector employers who provide transportation relief to their workers,” Oyedele added. “Also, we have had proposals around more employment. So if an employer employs more people than they will normally do, they get some relief. That helps to stimulate employment generation.”

The Challenge of Multiple Taxation

The committee’s recommendations come at a time when Nigeria’s complex tax environment has been widely criticized for stifling economic growth. Multiple taxation has been a major impediment, with various sectors of the economy bearing the brunt.

For example, in the first half of 2024, MTN Nigeria, the country’s largest mobile network operator, reportedly paid an astonishing N232 billion in taxes—a 586% increase from the same period last year. The company paid 54 different taxes in 2024 alone, imposed by federal, state, and local government agencies.

This overwhelming tax burden, which is expected to increase next by the end of the year, is not unique to MTN but affects the entire telecommunications sector. The Association of Licensed Telecommunication Operators of Nigeria (ALTON) has highlighted that state governments collect the majority of these taxes, which include building permits, sewage fees, and other arbitrary levies.

Gbenga Adebayo, President of ALTON, revealed that these taxes have increased the operational costs of telcos by 50% in 2024.

“The multiple taxes are driven primarily by revenue,” Adebayo stated. “There is a perception that the telecoms industry is highly profitable and so can be treated as a cash cow.”

He warned that the current tax environment threatens the expansion of broadband infrastructure, which is crucial for integrating millions of Nigerians into the digital economy.

Tackling the Menace

The federal government’s ongoing tax reform initiative, launched following the establishment of the tax and fiscal policy committee by President Bola Tinubu in August 2023, is a response to the pressing need for a more balanced and growth-oriented tax system. The committee, led by Oyedele, is tasked with crafting a new tax framework that not only drives economic growth but also ensures that the tax burden is equitably distributed.

The proposed tax exemptions on essential goods and services represent a bold step in this direction. However, the successful implementation of these reforms will depend on their approval by the National Assembly and the ability of the government to enforce them effectively.

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