In the wake of Nigeria’s proposed tax reform bill, labour unions, including the Trade Union Congress (TUC) and the Petroleum and Natural Gas Senior Staff Association of Nigeria (PENGASSAN), have raised critical concerns. While the reforms are hailed as progressive by some stakeholders, labour leaders argue that several provisions require substantial adjustments to ensure fairness and economic inclusivity.
A Mixed Bag: Positives and Pitfalls
Labour leaders have acknowledged the merits of the bill, citing measures aimed at easing tax burdens on low-income earners and small businesses. For instance, individuals earning ₦800,000 annually are exempted from paying personal income tax, and businesses with turnovers under ₦50 million annually are also relieved of tax obligations.
However, these thresholds have drawn criticism for being insufficient. According to a TUC spokesperson, the ₦800,000 benchmark is too low, excluding even those earning the minimum wage of ₦70,000 monthly. Labour has proposed increasing the exemption threshold to cover incomes up to ₦2.5–3 million annually, reflecting the current economic realities facing Nigerian workers.
Similarly, the tax-exempt turnover for small businesses should be raised to ₦70–80 million per annum to provide meaningful support to nano and small enterprises. Such adjustments, labour leaders argue, could bolster the survival rate of businesses, many of which fail within five years due to financial pressures.
Concerns Over Revenue Collection Centralisation
One contentious aspect of the bill involves the consolidation of revenue collection under the Federal Inland Revenue Service (FIRS). While this move promises streamlined operations, labour unions have expressed apprehension regarding its impact on the oil and gas sector. Currently, royalties in this sector are managed by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which possesses specialised expertise in tracing and assessing royalties at the wellhead.
Labour leaders fear that transferring this responsibility to FIRS could undermine efficiency and accountability, potentially enabling oil companies to exploit regulatory loopholes. They have called for a clear definition of the relationship between FIRS and sector-specific agencies like NUPRC and the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) to safeguard national interests.
Public Hearings: A Test of Government Commitment
The labour unions have underscored the importance of meaningful public hearings in shaping the final version of the tax reform bill. Drawing from past experiences with the Petroleum Industry Bill (PIB), they cautioned against tokenistic consultations that merely “tick the box.” Labour’s involvement in the PIB process had included recommendations for a single regulator model, akin to systems in Norway and Saudi Arabia. However, these proposals were ignored, leading to jurisdictional overlaps between the NUPRC and NMDPRA.
For the current bill, labour leaders are preparing a detailed position paper to present during public hearings. They emphasise the need for an open-minded approach by legislators to address silent provisions and unintended consequences.
Balancing Reform with Reality
Labour leaders agree that reforms are vital for Nigeria’s economic evolution. However, they stress that these reforms must be inclusive and reflective of the socio-economic conditions of the average Nigerian. Expanding tax exemption thresholds and refining regulatory frameworks are seen as pivotal steps to achieving a balance between revenue generation and economic equity.
Looking Ahead
As the tax reform bill progresses through legislative processes, its ultimate impact will depend on the extent to which labour’s concerns are addressed. The upcoming public hearings provide an opportunity for dialogue between policymakers, labour representatives, and other stakeholders. Whether this dialogue translates into actionable changes remains to be seen.
In an economy grappling with inflation and widespread hardship, the stakes are high. A tax reform bill that aligns with the principles of fairness and transparency could mark a significant milestone in Nigeria’s journey toward economic resilience.
