The conversation around the proposed tax bill is one that has drawn significant attention, and rightly so. As a lawyer, I believe it is our duty to engage critically with such legislation, not just to analyze its legal framework but also to assess its impact on the economy and the people it seeks to regulate. Let us examine this bill, weighing its potential gains against its apparent shortcomings.
The Gains: A Step Forward?
One of the key highlights of the proposed bill is its effort to broaden the tax base. The idea is simple: by bringing more individuals and businesses into the tax net, the government hopes to increase revenue without overly burdening compliant taxpayers. In principle, this makes sense. A wider tax net fosters inclusivity and accountability, especially in an economy where tax evasion remains rampant.
Another commendable aspect is the bill’s focus on digitalizing tax administration. Imagine a tax process that is less bureaucratic, more transparent, and easier to comply with. This could significantly reduce the bottlenecks we currently face, encourage voluntary compliance, and build trust between taxpayers and the government.
The bill also makes strides in incentivizing growth in priority sectors like agriculture and renewable energy. With Nigeria’s commitment to economic diversification, such measures could be the nudge these industries need to thrive. And let’s not forget the potential for improving our global competitiveness—streamlined tax rates and a modernized system might just attract the foreign investment we desperately need.
The Concerns: A Cause for Pause
While the bill shows promise, it is not without its flaws. The inclusion of small and medium enterprises (SMEs) in the expanded tax net raises a red flag. SMEs are the backbone of our economy, and any policy that threatens their survival must be approached with caution. Without adequate relief measures, this could end up stifling innovation and entrepreneurship—two things we need now more than ever.
Another concern lies in the risk of over-taxation. In an economy already grappling with inflation, imposing additional taxes or levies could inadvertently reduce disposable income and dampen economic activity.
From a legal standpoint, I am also troubled by the ambiguities within the bill. Vague provisions often lead to administrative abuse, excessive discretion, and, inevitably, litigation. As lawyers, we know the importance of clarity in legal drafting—this bill must be airtight to inspire confidence among taxpayers and investors alike.
Then there is the issue of implementation. While digitalization is a step in the right direction, the success of these reforms hinges on the efficiency of our tax administrators and the technological infrastructure available. Are we truly prepared for this shift? Without significant investment in capacity-building, we may find ourselves with lofty goals but no means of achieving them.
Finally, the perennial problem of double taxation remains a threat. Overlapping tax jurisdictions between federal and state governments could discourage compliance and increase the cost of doing business. This is a systemic issue that requires urgent attention, especially in light of the new bill.
The Way Forward: A Call for Balance
The proposed tax bill has the potential to transform Nigeria’s tax system, but it must strike a delicate balance between revenue generation and economic growth. Policymakers must ensure that its implementation does not inadvertently harm the very sectors it seeks to empower.
As lawyers, we have a role to play in advocating for clarity, fairness, and efficiency in tax administration. We must continue to engage in constructive dialogue, offering practical solutions and highlighting potential pitfalls. Our collective goal should be a tax system that not only drives development but also protects the interests of taxpayers and fosters trust in governance.
The bill is a step forward, but it is not without its risks. Let us work together to ensure that it becomes a tool for progress, not a burden to bear.
By Chidi Ezenwafor Esq., MCArb
Managing Partner, Ezenwafor & Co.
