How Tinubu tax reform bill go affect states for Nigeria

One bill to amend di law on how goment share money wey states bring from value added tax dey cause tok-tok.

Value added tax na di charge on sales of goods and services based on di value of di item dem sell. Businesses dey collect di charges and pass am on to goment.

Di four tax reform bill wey President Bola Tinubu propose don pass second reading for senate.

Dem be di Joint Revenue Board of Nigeria (Establishment) Bill, 2024 -SB.583; Di Nigeria Revenue Service (Establishment) BILL, 2024- SB.584; Di Nigeria Tax Administration Bill, 2024-SB.585; and di Nigeria Tax Bill, 2024 – SB.586.

Na di Nigeria tax bill wey many states govnors dey hala about.

Meanwhile di House of Representatives don suspend di debate on di Tax Reforms Bills wey for take place dis week indefinitely.

Wetin be di Nigerian tax bill?

Di Nigerian tax bill na bill wey go show how goment go share tax money for di kontri.

Dis bill go also torchlight di different rates pipo go pay for personal income tax, corporation tax, National Insurance contributions and value-added tax too.

E also cover who suppose pay tax and does wey no go pay tax.

How di tax reform bill affect states for Nigeria

Di tax reform bill go change di sharing formula wey goment dey use, so di portion wey many states dey collect bifor go change ( up or down) Gbolahan Olojede wey be financial expert tell BBC Pidgin.

Oga Olojede explain how di new tax reform bill go work.

Under di old distribution formula only 20% of di pool dey allocated based of derivation.

Wit di new tax reform bill goment go share 60% derivation.

60% derivation hia mean say dem go share 60% of di total money based on wia di money come from.

For example if we get a total of N100 for di pool, and we say 60% go dey based on derivation.

Make we say Lagos State contribute 50% of di whole money, e mean say out of di N60 wey goment wan share from derivation, Lagos State go get 50% of di N60, wey go be N30.

Di states wey contribute more to di pool go benefit more, becos 60% of di pool now go be based on derivation as against 20% under di old law.

Di more you contribute di more u go collect.

Why di bill dey controversial?

Oga Olojede say di di reason why di tax bill dey controversial na becos of di VAT allocation.

Goment wan give 60% of di money to wia e come from. Derivation dey compensate states based on how much dem dey contribute to di pool.

States wey dia contribution dey low go likely receive lower amount dan dem bin dey receive under di current law.

Borno state govnor open up why di north no dey comfortable.

“... We feel say di VAT provision for di tax law. Based on di calculations wey we do, only Lagos and Rivers States go benefit from dis scheme. We do our own research and conclude say we go lose.” Babagana Zulum tell Channels television.

Wetin be di oda changes wey di bill dey propose?

Di bill dey propose zero tax for pipo wey dia incomes na N800,000 naira and below. Bifor now di cap na N300,000 naira.

Pipo wey dey earn below dat amount no go pay personal income tax at all.

Di bill dey propose lower rates for those wey dey earn above N800k but below di top earners.

So if pesin dey work and earn N800, 000 naira im employer no go deduct PAYE wey mean ( pay as you earn) from im salary.

Di bill dey propose higher rates for top earners.

For small medium enterprise wey dia revenues dey less dan N50 million Naira, dem no go pay corporation tax at all. So dem fit make profit and enjoy or use am to expand dia business.

Nigeria tax bill need reform?

Wen we ask Oga Olojede about weda Nigeria need to change dia tax laws e say ''di tax law wey Nigeria dey use dey very old and we need to change am''.

Di financial expert point out some of di issues wit di current law, Too many taxes poor distribution of tax burden, inefficient collection, ease of returns and payments, many pipo dey out of di tax nets, low tax to GDP ratio ( one of di lowest for di world).

Na all dis issues di new bill go address.