The Tinubu-led federal government is considering a new tax policy that would impose higher taxes on individuals earning N5 million or more per month. This proposal was revealed by Mr. Taiwo Oyedele, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, during an assessment workshop held in Lagos on Thursday.
According to Oyedele, the government’s plan aims to introduce a more progressive tax system, ensuring that higher earners pay more while those with lower incomes get some relief. He mentioned that Nigerians earning less than N2 million per month could see a reduction in their personal income tax rate.
“We are proposing that the personal income tax rate should be reduced for anybody who is earning around N2 million per month or less but the personal income tax rate should be increased for anybody earning N5 million per month or more. Between N2 million and N5 million, your PIT rate would remain the same,” Oyedele explained.
He further highlighted the current issue with Nigeria’s tax system, where high earners are taxed at the same rate as middle-income earners. “In Nigeria today, if you earn N20 million per year, your tax rate is 19 percent. If you earn N1 billion monthly, your tax rate is the same. So our tax rate is not progressive,” he said.
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The committee is still working on the details of the new tax rates, and discussions with state governors are ongoing. Governors play a crucial role as they will be significantly impacted by these changes.
In addition to the proposed tax changes, the committee has also suggested that the Nigerian government should fix the customs import exchange rate at N800 per dollar. This measure aims to stabilize the fluctuations and volatility in the current exchange rate.
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