'Seun Ibukun-Oni, Abuja
Tayo Busayo, Abuja
DAILY COURIER — In a bid to address the economic challenges faced by Nigerians, the Federal Government has unveiled new tax reforms aimed at easing the tax burden on businesses while placing a higher tax responsibility on wealthy individuals. The reforms were announced during the 30th Nigerian Economic Summit in Abuja on Monday, where Vice President Senator Kashim Shettima defended the government’s economic policies amid growing concerns over inflation and fuel price hikes.
The government disclosed its plan to reduce corporate income taxes from 30% to 25% in a bid to alleviate the financial strain on companies, while raising personal income taxes for high earners to 25%. These measures are part of broader fiscal policy reforms designed to create a more balanced economic environment.
FG Empathises With the Poor but Sees No Option
Vice President Shettima, speaking at the summit, acknowledged the difficult conditions many Nigerians are facing, particularly the poor. He highlighted the impact of policies introduced by the administration of President Bola Tinubu, which have resulted in fuel subsidy removal and a floating naira, pushing inflation to a three-decade high.
“My heart and the heart of President Bola Tinubu go to the Nigerian people. We empathise with what the poor and the young are going through,” Shettima said. He emphasized that while the policies are painful, they are necessary for long-term economic recovery. “Some of these decisions are unpopular, but the truth is often what people prefer not to hear,” he added.
Corporate Tax Cuts, Wealthy to Pay More in Income Taxes
Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, provided key insights into the government’s new tax strategy. The government will lower the corporate tax rate from 30% to 25%, offering relief to businesses that have been bearing significant financial pressures.
However, the reforms will increase personal income taxes for wealthy individuals earning up to N100 million monthly, who will now pay a 25% tax rate. Those earning between N1.5 million and N100 million per month will also see incremental increases in their tax obligations, while those earning below N1 million will be exempt from the new tax regime.
“We have been very intentional in reducing the tax burden on businesses, but those earning more will need to contribute more,” Oyedele stated. He noted that the goal is to balance the economic books while easing the strain on ordinary Nigerians.
Relief on Food, Health, and Education Costs
As part of the reform, the government plans to reduce or remove taxes on essential goods and services, including food, health, education, and transportation. These expenses currently account for around 82% of the total spending for many Nigerians, making this a significant area for relief.
Oyedele reassured citizens that the government is not planning to introduce new taxes or increase tax rates on essential items. Instead, the focus will be on creating a fairer tax system that places more responsibility on wealthier individuals while reducing the burden on the average Nigerian.
Tackling Economic Instability
Shettima acknowledged the volatility of Nigeria’s economic growth trajectory, largely reliant on oil revenue. He pointed to global challenges like the COVID-19 pandemic and fluctuating oil prices as factors contributing to Nigeria’s current economic difficulties. However, he stressed that the administration is committed to implementing reforms to revive the economy and create jobs.
The government’s tax reforms, expected to take effect in January 2025, aim to strike a balance between supporting businesses, especially small and medium enterprises, and ensuring that wealthy individuals contribute a fairer share to national revenue.
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