The Federal Government has proposed a new tax regime that will see individuals earning above N100 milliom pay a 25 percent personal income tax rate.
This was disclosed by the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, during a breakout session at the ongoing 30th Nigeria Economic Summit in Abuja.
According to Oyedele, the proposed policy is aimed at ensuring that the wealthy contribute more to government revenue and to reduce the tax burden on lower-income earners.
“If you earn N100m a month, we are taking up to 25 per cent from the rich people. That’s because we need to balance the books,” he said.
The proposed policy is expected to take effect from January 2025, based on the passage of the bill by lawmakers.
Additionally, middle-income earners making N1.5m or less per month will see a decrease in their personal income tax obligations, while those earning higher amounts will see incremental increases in their tax rates, eventually reaching 25 percent. Lower-income earners would be fully exempt from personal income tax.
Oyedele emphasized the need to strike a balance between easing the tax burden for lower-income earners and ensuring the wealthy contribute more to government revenue.
“We cannot give all the incentives you are asking for. We think the biggest low-hanging fruit is removing these incentives, and that’s exactly what we are doing,” he said.
The reforms also aim to ease the tax burden on businesses, with a reduction or elimination of VAT on essential goods and services such as food, health, education, accommodation, and transportation.
However, not all sectors would benefit from reduced tax rates, as the VAT rate would increase on other goods and services to ensure the government’s revenue book balance.
