As the Joint Committee on Finance from both Chambers of the National Assembly , begins public hearing sessions on the Finance Bill presented to them for consideration by President Muhammadu Buhari last month , Taiye Odewale examines the issues at stake as regards reservations of some lawmakers on the bill .
When on Tuesday, October 8, 2019, President Muhammadu Buhari presented to the joint sitting of the National Assembly , Finance Bill 2019 along with the N10.33trillion Appropriation bill for consideration and approval, the demand was never expected to generate disagreements among the federal lawmakers.
President Buhari had at the budget presentation submitted thus on the Finance Bill “Accompanying the 2020 Budget Proposal is a Finance Bill for your kind consideration and passage into law.
“This Finance Bill has five strategic objectives, in terms of achieving incremental, but necessary, changes to our fiscal laws. These objectives are: (a), Promoting fiscal equity by mitigating instances of regressive taxation; (b) Reforming domestic tax laws to align with global best practices; (c), Introducing tax incentives for investments in infrastructure and capital markets; (d), Supporting Micro, Small and Medium-sized businesses in line with our Ease of Doing Business Reforms; and (e). Raising Revenues for Government.
“The draft Finance Bill proposes an increase of the VAT rate from 5% to 7.5%. As such, the 2020 Appropriation Bill is based on this new VAT rate. The additional revenues will be used to fund health, education and infrastructure programmes. As the States and Local Governments are allocated 85% of all VAT revenues, we expect to see greater quality and efficiency in their spending in these areas as well.
“The VAT Act already exempts pharmaceuticals, educational items, and basic commodities, which exemptions we are expanding under the Finance Bill, 2019. Specifically, Section 46 of the Finance Bill, 2019 expands the exempt items to include the following: (a) Brown and white bread; (b), Cereals including maize, rice, wheat, millet, barley and sorghum; (c) Fish of all kinds; (d) Flour and starch meals; (e) Fruits, nuts, pulses and vegetables of various kinds; (f) Roots such as yam, cocoyam, sweet and Irish potatoes; ( g) Meat and poultry products including eggs; (h) Milk; (I) Salt and herbs of various kinds; and (j), Natural water and table water.
“Additionally, our proposals also raise the threshold for VAT registration to N25 million in turnover per annum, such that the revenue authorities can focus their compliance efforts on larger businesses thereby bringing relief for our Micro, Small and Medium-sized businesses.
” It is absolutely essential to intensify our revenue generation efforts. That said, this Administration remains committed to ensuring that the inconvenience associated with any fiscal policy adjustments, is moderated, such that the poor and the vulnerable, who are most at risk, do not bear the brunt of these reforms”.
But on Wednesday, November 6, 2019, when the Bill was presented for second reading in the Senate , many of the Senators who contributed kicked against what was presented to them , which they said , were different from what President Buhari presented in the budget speech .
Specifically, Senator Betty Apiafi ( PDP Rivers West) said the bill as presented by the Senate Leader , Senator Yahaya Abdullahi ( APC Kebbi North), in his lead debate aimed at increasing other taxes apart from VAT , which according her , will have adverse effects on Small and Medium Scale Business in the country.
Her words : The bill supposed not to be hurriedly passed for second reading the way it done today ( Wednesday, November 6, 2019) on the floor of the Senate .
‘It aims at amending extant rules on seven different taxes in the country from VAT to Personal income tax, Customs and Excise tax , Companies Income tax, Stamp Duty etc , without availing the lawmakers the details of what and what amendments to be made .
“For me , if opportunity had been given for full debate on the bill before it was passed for second reading , my submission would have been on the need for government to be very cautious so as not to over taxed the people who are struggling to make ends meet .
“To be very blunt, I am against it and I will kick against it during public hearing session.”
Similarly the former Senate Leader , Ali Ndume ( APC Borno South) , also called for caution on the planned amendment or upward review of different categories of taxes in the country .
Ndume who made the call in a telephone conversation with the Blueprint said ” In as much as more revenues are being targeted by government from the area of taxes in funding or implementing the 2020 budget, the vulnerables still need to be protected and that will be my own line of submission during the Public Hearing session or when report on the session is brought to the Senate by the Finance Committee”.
However, the Joint Committee seems to be well prepared for such details during the public sessions as contained in its advertorials.
