Nigeria’s tax reforms set to phase out collections by ‘agberos

The Nigerian tax reform bill aimed at consolidating existing tax laws and enhancing tax administration frameworks will reduce multiple taxation and collection from louts popularly known as ‘agberos’, analysts believe.

President Bola Tinubu embarked on Tax and Fiscal Policy Reforms to streamline tax administration in Nigeria and make the operating environment conducive for businesses.

“Most of these things have been applauded in the past that there should not be an arbitrary collection of tax by non-state actors such as agberos in the motor park or market as these things are illegal but there is no one to enforce,” Muda Yusuf, chief executive officer of CPPE.

“The problem is not in the reform but in the enforcement. There should be law enforcement agencies such as the military, police, civil defence, and customs to enforce it. It is necessary to have a framework for effective enforcement,” he stated.

Olaolu Boboye, lead economist at CardinalStone Securities Limited, said “taxes collected from agberos are informal and sometimes tracking them can be difficult. It will be more difficult for the government to regulate or manage.

“Once the bill is approved, the government can ask agberos to stop collecting from people,” he stated. The government can also try to make the collection more structured, depending on the approach they will take. The government is trying to make sure that they get enough taxes, especially from those evading or avoiding taxes.”

Boboye said the aim was to simplify the tax system in Nigeria because of the multiple taxation.

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“The government also wants to ensure that the cost of collection is not exorbitant. All parties also have to be managed appropriately to ensure the agberos have what to do such as empowerment programs. It should be carefully crafted before any policy is enacted,” he said.

The bills are the Joint Revenue Board of Nigeria (Establishment) Bill, 2024 -SB.583; the Nigeria Revenue Service (Establishment) Bill, 2024- SB.584; the Nigeria Tax Administration Bill, 2024-SB.585; and the Nigeria Tax Bill, 2024 – SB.586.

Some Nigerians have, however, criticised the tax reform bills, claiming they favour some parts of the country over others. However, proponents have said that many of those criticising the bills have not read their provisions and are only amplifying falsehoods.

However, the Senate has said they should stop deliberation for more consultation. The bills have elicited mixed reactions, with some stakeholders from the north diametrically opposed to their passage.

These reform bills have also been faced with controversy by lawmakers, state governments.

Bayo Onanuga, President Bola Tinubu’s spokesperson, also said in a statement that the bills would not disproportionately favour any part of the country, contrary to claims of critics and skeptics.

“One reason President Bola Tinubu embarked on the Tax and Fiscal Policy Reforms is the need to streamline tax administration in Nigeria and make the operating environment conducive for businesses.

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“For decades, businesses, investors, and private sector players in Nigeria have complained of being overburdened by a myriad of taxes and levies, including those earmarked to fund various government agencies and initiatives,” he stated.

He said the multiple taxes complicate the economic environment, making Nigeria uncompetitive for investment and preventing many businesses from growing or continuing their operations.

“Some companies have had to make the rational decision to relocate to other countries. We cannot continue on this path or wait for 20 years if this country is to deliver the prosperity we need for our people,” Onanuga said.

Taiwo Oyedele, the chairman of the Presidential Committee on Tax Policy and Fiscal Reforms, said on his LinkedIn page that “over 50 nuisance taxes are to be repealed, with remaining levies harmonised into a few number of taxes. Corporate income tax rates will reduce from 30 percent to 25 percent over the next two years, and earmarked taxes on companies will be replaced with a streamlined single levy.

“VAT revenue will be distributed among states based on an equitable model to reward economic contributions, rather than the current model which is skewed in favour of states with head office locations where VAT remittances are usually made,” he said.

In an interview on Channels Television, Oyedele pointed out that small businesses were dealing with over 60 official levies and taxes, as well as more than 200 unofficial ones, while many people are struggling to feed themselves due to escalating food inflation.

President Bola Tinubu asked the National Assembly to consider and pass four tax reform bills on October 3. The legislation consists of the Nigeria Tax Bill, Nigeria Tax Administration Bill, Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill.