The fiscal policy and tax reforms comitee said it welcomes the interest of the Nigeria Labour Congress (NLC) on the Tax Reform Bills. They also noted the concern expressed about the likely impact on the welfare of Nigerian workers.
To clarify, the comitee outline below some of the key provisions of the tax bills aimed at improving the welfare of workers:
1. Lower taxes to enhance the disposable income of workers –
a) Full exemption of low-income earners up to N1m p.a. (about N83k per month) representing about one-third of all workers in the private and public sectors from PAYE tax
b) Reduced PAYE tax for workers earning up to N20m p.a. (about N1.7m per month) benefiting additional 60% of all workers
c) PAYE tax exemption for members of the armed forces fighting insecurity in addition to other ranks
2. Measures to reduce the cost of essential items –
a) Zero (0%) VAT on food, healthcare, and education representing about 60% of all consumptions
b) VAT exemption on transportation, renewable energy, CNG, baby products, sanitary towels, and fuel products representing over 20% of all consumptions
These items constitute an average of 82% of household consumption and nearly 100% for low income earners to ameliorate the rising cost of living for workers.
3. Incentives to facilitate higher compensation for workers –
a) Tax break for wage awards and transport subsidy to low-income earners
b) Removal of restrictions and bureaucratic approvals for wage awards
c) Introduction of a cap on the taxable amount of benefit in kind granted to workers
4. Tax waivers to promote affordable housing –
a) VAT exemption on rent and acquisition of real property
b) Exemption of stamp duties on rent below N10m
5. Incentives to stimulate employment opportunities for workers –
a) Tax incentives for employers to hire more workers
b) Friendly tax rules to attract remote work opportunities for Nigerians
c) Tax exemption for 97% of SMEs, harmonisation and reduction of corporate tax rates for large businesses to stimulate growth and create more employment opportunities for workers.
While the comitee said it recognise that the tax bills can be further improved through robust debates and engagements, which can take place as part of the ongoing legislative process, the bills in their current form are the most pro-workers tax reform in Nigerian history. The comitee believes that the NLC will not intentionally work against the interest of its members. The comitee said it look forward to the opportunity to discuss specific areas for improvement in the bills to better serve the interest of all Nigerians including workers.
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