By Bronson Jayamanna
NIGERIA (CWBN)_ Yesterday (18th Nov), the Federal Executive Council (FEC) approved the Finance Bill 2020. Still, it reassured Nigerians there would be no new tariff.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, clarified that the bill was not intended to raise taxes as tax rates. She went on to say that the 7.2 per cent value-added tax (VAT) would remain the same and that the goals of the bill are to strengthen current tax legislation and to follow the trend of previous finance bills in order to reduce other forms of taxation, particularly for small and medium-sized enterprises (SMEs). Ahmed also noted that the bill would seek to ensure the reduction of 2 per cent of education tax charged by the smallest enterprises despite the zero payment of business income tax.
She went on to say, “Let me remind you that in the 2019 bill, we actually reduced taxes from 30 per cent to 20 per cent for medium enterprises and from 30 per cent to zero per cent for very small or macro enterprises. These reductions in taxes are being reinforced in the 2020 Finance Bill by further removing the education tax of two per cent that the smallest businesses still have to pay despite their zero payment of company income tax.”
The Minister then went on to say that the bill aims to make gradual amendments to the customs and excise tax laws, including other current tax laws to assist in the implementation of the Appropriation Act. She further claimed that when President Muhammadu Buhari introduced the budget for 2021 to the National Assembly, he vowed to deliver the 2020 Finance Bill that would help the legislative proposals for the funding.
The Minister also noted that incremental changes indicate gradual changes to the tax structure, but that incremental changes, as provided for in the bill, aim to reduce the tax burden in light of the current economic challenges caused by the COVID-19 pandemic. She continued that the federal government is currently working on the implementation of fiscal reforms in line with what she mentioned as the Multi-Year Medium Term Expenditure Framework (MTEF). The Minister also expressed hope that the finance bill would signal specific changes on a gradual basis.
The Minister went on to say, “So, this finance bill for 2020 was developed as a result of a very large multi-stakeholder effort under Fiscal Policy Reform Committee that has several ministries, departments and agencies as members but also the private sector, experienced tax practitioners and academics.”
“During the process, we received a lot of suggestions from different stakeholders, but we had to limit what we could take because we are bound by three principles – to adopt appropriate counter fiscal measures to manage the economic slowdown; incrementally reforming the fiscal incentive policies of the government and ensuring closer coordination between the monetary trade as well as fiscal authorities.”
“A few of the provisions of the 2020 Finance Bill, the broad principle, is to consider how we will have adequate macroeconomic strategies to attract investments, to be able to grow the economy on a sustainable basis but also to create jobs as the immediate fiscal strategies to put in place accelerated domestic revenue mobilisation in response to COVID-19 pandemic and the recent decline in the economy.”
“In producing this bill, what we were inadvertently doing was amending provisions in 13 different taxes, which include the Capital Gains Tax Act, Companies Income Tax Act (CITA), Industrial Development (Income Tax Relief) Act (IIDITRA), Personal Income Tax Act (PITA), Tertiary Education Trust Fund Act, Customs and Excise Tariff (Consolidation) Act, Value Added Tax Act (VATA), Federal Inland Revenue Service (Establishment) Act, the Fiscal Responsibility Act and the Public Procurement Act.”
“Some highlights of these provisions include amendments that we have had to provide incremental changes to tax laws. These amendments include providing fiscal relief for corporate taxpayers, for instance, by reducing the applicable minimum tax rate for two consecutive years. So, from 0.5 per cent to 0.25 per cent.”
“These reforms will commence and will also be closely followed by the cessation rules for small businesses as well as providing incentives for mass transits by reducing import duties and the levies for large tractors, buses and other motor vehicles. The reason for us is to reduce the cost of transportation which is a major driver of inflation, especially food production.”
The Minister went on to list other steps to establish what she described as a legal construct to help the growth of the Crisis Intervention Fund, which in turn would help cushion the impact of COVID-19. She also said the federal government was modifying the Fiscal Responsibility Act “to increase fiscal efficiencies and also to monitor the cost revenue ratios of government-owned enterprises so that we can see more operating surpluses from those enterprises.”
The Minister further went on to say, “There are a lot of provisions in this bill. We will be publishing the summary of the draft bill on our various websites the moment Mr. President conveys the bill to the parliament so that we get inputs from the citizens as the parliament undertakes its own review processes.”
Also during the FEC meeting in the State House, the Minister of Works and Housing, Mr Babatunde Fashola, clarified the numerous steps his Ministry had made in the housing sector to make the process of owning houses easier for people. He said that these measures had been included in a 280-page report had been submitted to the Council.
As per the Minister, various housing projects are underway in multiple regions of the country, with 186 housing units already completed, while 2,300 others are still under construction.
He went on to say that since its creation, the Federal Housing Authority (FHA) has produced 45,000 housing units in 81 properties across the country, adding that the Agency provides not less than 1,000 housing units per year. The Minister further claimed that any worker who had contributed to the National Housing Fund (NHF), based in the Federal Mortgage Bank of Nigeria for six months, is entitled to use the fund to buy a house.
Furthermore, he stated that the process of obtaining a Certificate of Occupancy (C of O) had been made easier for those who want to build their own houses and a total of 3,290 certificates had been issued recently. However, the Minister also noted that it is essential that to receive any loans for residential buildings, the properties should contain titles.
He also said a primary factor causing physical assets to not be used as collateral for loan access in the purchasing or development in housing is that someone who wants to access the NHF had to be a registered contributor to the housing fund. He also said the method of obtaining the loan is complicated, leading to a waiting time of a few months because specific inquiries have to be carried out after applications have been received to validate statements of applicants.
Edited by Elishya Perera
