HB. 201-A BILL FOR AN ACT TO ALTER THE PROVISIONS OF THE CONSTITUTION OF THE FEDERAL REPUBLIC OF NIGERIA, 1999 (AS ALTERED), TO CLEARLY SPECIFY TAXES/ LEVIES TO BE COLLECTED BY EACH TIER OF GOVERNMENT AND FOR RELATED MATTERS. Bill Progress: Committee Stage.
This Bill seeks to alter the Constitution of the Federal Republic of Nigeria, 1999, to clearly categorize and classify the taxes and levies collectible by the Federal, State and Local Governments. The proposed amendment aims to eliminate ambiguities in revenue collection and reduce intergovernmental conflicts.
By clearly specifying the tax jurisdictions of the Federal, State, and Local Governments, the Bill seeks to enhance efficiency in revenue generation, improve tax compliance, and foster better coordination in the administration of public finances.
A new legislative bill in Nigeria seeks to tackle the intricate and often contentious issue of tax powers among the country’s three tiers of government—Federal, State, and Local. Currently, the allocation of taxing authority is outlined in the 1999 Constitution and governed by various laws such as the Taxes and Levies (Approved List for Collection) Act. However, ambiguities and overlaps in these regulations have led to widespread confusion and disputes over tax collection rights, prompting the introduction of this bill.
The core objective of the proposed bill is to amend the 1999 Constitution to clearly specify which taxes and levies each level of government is authorized to collect. The intention is to bring clarity to the existing tax landscape, reduce legal disputes among governmental layers, and improve overall revenue generation and allocation.
Currently, many Nigerians face the burden of multiple taxation, where both businesses and individuals are taxed several times by different tiers of government on the same income or activities. This overlapping system creates a confusing fiscal environment that can stifle economic activity. Furthermore, frequent disagreements arise over tax collection rights, particularly concerning contentious taxes like value-added tax (VAT) and consumption taxes. These disputes divert time and resources away from governance and further complicate the country’s fiscal landscape.
The bill aims not only to delineate taxing authority but also to address revenue leakages that occur due to inefficiencies in collection processes across the tiers of government. Lack of clarity can breed confusion for taxpayers, leading to compliance issues and resulting in lost revenue for all parties involved. Moreover, the current structure often leads to significant fiscal imbalances, whereby the federal government controls the most lucrative sources of revenue, leaving state and local governments struggling to meet their financial obligations.
While the specifics of the bill are yet to be disclosed, it is anticipated that it would include several transformative provisions. One likely amendment would involve modifications to the Exclusive and Concurrent Legislative Lists of the Constitution, assigning specific taxes and levies to respective government tiers. This would help eliminate the confusion that often arises from overlapping taxing powers.
Additionally, the bill might define the taxable bases for each tier, preventing simultaneous taxation of the same economic activities under different guises. Furthermore, while the main focus is on collection rights, the legislation may also establish clear principles for revenue-sharing among the different tiers of government, fostering a more equitable distribution of funds.
To enhance tax efficiency, the bill could propose mechanisms for better coordination among tax authorities, thereby reducing friction and ensuring that tax policies are harmonized. Strengthening bodies like the Joint Tax Board could facilitate this goal, ensuring that tax administration is smooth and cohesive.
By defining approved taxes explicitly, the bill may also aim to curb the proliferation of unauthorized or so-called “illegal” levies imposed by various agencies, which have added complexity and confusion to the current tax regime.
If successfully passed and implemented, this legislation could have several positive impacts on Nigeria’s fiscal landscape. Increased fiscal certainty would provide greater clarity for taxpayers and investors, ultimately improving the ease of doing business in the country. Streamlining tax obligations could potentially reduce the overall tax burden on citizens, even if individual rates remain unchanged.
Moreover, clearer guidelines for tax collection could enhance revenue generation, leading to more efficient compliance and boosting total government revenue across all tiers. A well-defined framework for taxation would also help to significantly reduce inter-governmental disputes related to tax collection rights, paving the way for a more collaborative fiscal environment.
However, there are challenges that the bill could face before it becomes law. Achieving political consensus among the three levels of government on tax powers is often contentious. While states might demand greater taxing responsibilities, the federal government may be reluctant to relinquish control over valuable revenue sources.
Furthermore, any changes would necessitate comprehensive economic impact assessments to avoid disproportionately burdening certain sectors or regions. States and local governments would also need investments in human and technological resources to effectively manage newly assigned taxes. Resistance to change from various interest groups benefiting from the current ambiguous arrangements could further complicate the bill’s passage.
If crafted thoughtfully and enacted successfully, the proposed legislation promises to overhaul Nigeria’s tax administration, addressing long-standing issues and enhancing inter-governmental financial relations. By delineating clear taxing powers, the bill aims to create a fairer and more efficient tax system that could ultimately facilitate greater fiscal autonomy for sub-national governments and contribute to the nation’s economic health.
