FG Targets 25% Tax Revenue from Nigerians Earning Over N100 Million

Taiwo Oyedele, the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, has indicated that affluent Nigerians earning N100 million or more monthly may face a 25% personal income tax rate if a proposed tax bill is approved by the National Assembly.

He made this announcement during a breakout session at the ongoing 30th Nigeria Economic Summit, organized by the Nigerian Economic Summit Group and the Ministry of Budget and National Planning on Monday in Abuja.

According to Channels TV, Oyedele noted that 90% of current taxpayers should not actually be taxed.

He called for a more streamlined and fair tax system in the country, stressing the importance of balancing the tax burden for lower-income earners while ensuring that the wealthy contribute a larger share to government revenue.

“If you earn N100m a month, we are taking up to 25 per cent from the rich people. That’s because we need to balance the books,” Oyedele stated.

He stated that the government is committed to ensuring that the appropriate individuals pay taxes, highlighting that his committee is actively working towards this goal.

Oyedele mentioned that the proposed changes are anticipated to take effect from January 2025, contingent upon the passage of the bill by lawmakers.

The reforms also aim to reduce the tax burden on businesses.

For middle-income earners earning N1.5 million or less per month, he revealed that their personal income tax obligations would decrease, while those with higher incomes would see incremental increases in their tax rates, eventually reaching 25%.

Additionally, lower-income earners would be fully exempt from personal income tax.

“Today, whatever VAT you (businesses) pay on assets—whether you’re building a factory, buying a laptop, or vehicles—you bear it. This increases your cost, and therefore, your pricing will go up. Once our reforms are implemented, you get the credit back 100 per cent on services and assets.

People will pay tax once we decide that they have to pay. What we realize is that almost 90 per cent of people who are paying taxes are those who should not have been paying in the first place.

So that’s where we came up with the data that 97 per cent of the informal sector should be formally exempted from taxes. People do not understand where we are coming from. They’re not the ones to pay taxes. They’re just trying to survive.”

He also noted that inflation has already served as a “disorderly” tax on the population, diminishing the value of their money without requiring any new laws.

In response to concerns about tax incentives and waivers, Oyedele argued that indiscriminate incentives can negatively impact the economy.

He suggested that eliminating unnecessary incentives could benefit the business sector without resulting in a loss of government revenue.

“We cannot give all the incentives you are asking for. We think the biggest low-hanging fruit is removing these incentives, and that’s exactly what we are doing,” Oyedele said.

Additionally, the corporate income tax rate is set to decrease from 30% to 25%, which Oyedele called a “huge” benefit for businesses.

Other notable tax changes include a reduction or elimination of VAT on essential goods and services such as food, healthcare, education, accommodation, and transportation.

These essential services constitute a significant portion of household spending for lower-income populations, and the proposed reforms aim to alleviate their financial burden.

However, Oyedele acknowledged that not all sectors would benefit from reduced tax rates. For other goods and services, the VAT rate would be increased to maintain balance in the government’s revenue.

Regarding his committee’s efforts to ensure that the right individuals pay taxes, Oyedele stated that the team would use primary data identification channels to accurately incorporate the appropriate group of taxpayers into the tax system.