…queries assigning royalty collection to Nigeria Revenue Service
By Michael Oche
Trade Union Congress of Nigeria (TUC) has called for an upward review of the tax exemptions in the proposed tax reform bill from the current ₦800,000 per annum, to ₦2,500,000 per annum.
TUC in a statement by its president Comrade Festus Osifo said this will provide relief to struggling Nigerians within that income bracket, easing the excruciating economic challenges they face by increasing their disposable income.
The Congress also said the proposed bill assigning royalty collection to the Nigeria Revenue Service (NRS) appears beneficial on the surface but would most likely result in significant revenue losses for the government.
Osifo said, “Royalty determination and reconciliation require specialised technical expertise in oil and gas operations, which NUPRC possesses but NRS lacks, potentially leading to inaccurate assessments and enforcement issues. Additionally, this shift would create regulatory burdens, increase compliance costs for industry players, and reduce investor confidence due to overlapping functions and inefficiencies between NUPRC and NRS.”
TUC had last year advocated for some adjustments to the tax reform bill. The TUC proposed captured five areas which include, the increment in VAT from the current 7.5% to 10%, 12.5% and finally to 15%; Tax exemptions limited to those earning 800,000 Naira per annum; gradual defunding of TETFUND and NASENI; and Nigeria Revenue Services taking over the role of NUPRC in the collection of royalties in the oil and gas industry.
Osifo said, “Allowing the Value Added Tax (VAT) rate to remain at 7.5% is in the best interest of the nation, as increasing it would place an additional financial burden on Nigerians, many of whom are already struggling with economic challenges. At a time when inflation, unemployment, and the cost of living are rising, imposing higher taxes would further strain households and businesses, potentially slowing economic growth and reducing consumer purchasing power.
“It is also good to note that both TETFUND and NASENI will remain a going concern, as these institutions have greatly impacted the country through their respective mandates. Both have respectively been instrumental in improving our tertiary education and the adoption of homegrown technologies to enhance national productivity and self-reliance. Their continued existence is vital for sustaining progress in education, technology, and economic development across the country.
“On a general perspective, we welcome the inclusion of the derivation component in the Value Added Tax distribution amongst the three tiers of government. When passed into law and properly implemented, it will encourage productivity at the sub-national level thereby moving us gradually from a total rent seeking economy to a derivation based system that will stimulate economic activities”, it added.
The TUC president said as the conversations around the Tax Reform Bill continue; it is their expectation that the focus would be equitable economic growth and improved living conditions for all Nigerians.
