The Chairman of the Presidential Committee on Fiscal Policy, Taiwo Oyedele, has revealed that his committee has recommended the removal of taxes on essential items such as food, public transportation, house rents, and other necessities vital to Nigerians’ well-being.
Oyedele disclosed this during an appearance on Channels Television’s Politics Today program on Monday, where he outlined the committee’s proposal, which also includes the exemption of value-added tax (VAT) on these critical necessities.
VAT and Necessities: A Misalignment?
The committee’s recommendation raises the question of why VAT is currently applied to these necessities. According to existing tax laws, VAT is typically charged on luxury goods. However, in Nigeria, where economic policies often defy conventional logic, this misalignment is not entirely surprising.
Oyedele noted that the proposal is expected to be signed by President Tinubu before being forwarded to the National Assembly for inclusion in Nigeria’s tax laws.
Details of the Proposal
“What we have taken into account are the necessities of life—food, accommodation, transportation, education, and health,” Oyedele explained. “We’ve deliberately identified these items and have removed almost all applicable taxes, including VAT.”
He added, “From a fiscal policy and tax perspective, this initiative aims to make these necessities more affordable for the Nigerian people. Shared-passenger transportation, for instance, will be completely tax-free.”
However, Oyedele clarified that certain services would still be taxed. “If you hire a taxi, we assume that you’re not among the poorest Nigerians, so you will have to pay tax. But if you take a bus, that will be completely tax-free. That’s the distinction we’ve made.”
Concerns About Implementation
While this initiative is a positive step, it raises critical questions about its implementation, particularly in the transportation sector. If the government removes taxes on public transportation, does this mean that the National Union of Road Transport Workers (NURTW), which often collects levies from transport buses—particularly in Lagos—will be disbanded or have its powers curtailed? Will the new law render NURTW’s operations illegal, especially regarding the collection of levies from buses and market traders?
Moreover, will this policy address the broader issue of unreasonable levies imposed on struggling citizens by various road workers and local authorities?
The Bottom Line
As the proposal awaits further action, it remains to be seen how these policies will be implemented and what changes they will bring. The success of this initiative will depend not only on the removal of taxes but also on ensuring that the benefits reach the intended recipients without being undermined by other forms of informal taxation or levies.
