The proposed Tax Reform Bills will significantly improve the quality of life for workers, the Federal Government has reaffirmed.

In response to misgivings expressed by the Nigeria Labour Congress (NLC) Joe Ajaero, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele outlined key measures embedded in the bills.

He said lowly-paid workers earning around N1 million annually (approximately N83,000 monthly), would enjoy full exemption from the Pay As You Earn (PAYE) tax. This policy would cover nearly one-third of workers in both the public and private sectors.

For middle-income earners, the bills propose reduced PAYE tax rates for those earning up to N20 million annually (about N1.7 million per month), benefiting an additional 60 percent of Nigerian workers.

Members of the armed forces actively engaged in combating insecurity will also receive PAYE tax exemptions alongside other ranks.

To mitigate the rising cost of living, the bills propose eliminating Value Added Tax (VAT) on essential goods and services, including food, healthcare, and education, which account for approximately 60 percent of all household consumption.

Other items such as transportation, renewable energy, compressed natural gas (CNG), baby products, sanitary towels, and fuel products, representing over 20 percent of household consumption, are also exempted.

Oyedele explained that these measures would address nearly 82 percent of household expenses and up to 100 percent for low-income earners.

The tax reform bills include provisions to incentivize better compensation for workers. These include tax breaks for wage awards and transport subsidies targeting low-income earners.

Furthermore, the bills aim to simplify processes by removing bureaucratic restrictions on wage awards and introducing caps on taxable benefits granted to workers.

Oyedele explained that the reforms propose VAT exemptions on rent and property acquisition to promote affordable housing. Stamp duties on rents below N10 million would also be waived to alleviate housing-related financial burdens.

The tax reforms also prioritize employment creation through various incentives. These include tax benefits for employers hiring more workers, tax-friendly rules to attract remote work opportunities for Nigerians, and tax exemptions for 97 percent of Small and Medium Enterprises (SMEs).

The harmonization and reduction of tax rates for large businesses are expected to stimulate growth, creating more job opportunities.

Acknowledging that the tax bills could be refined further, Oyedele noted the importance of robust debates and stakeholder engagements during the legislative process.

“The bills in their current form are the most pro-workers tax reforms in Nigerian history,” he stated, urging the NLC to collaborate in identifying areas for improvement.

“We believe the NLC will not intentionally work against the interest of its members. We look forward to discussing specific areas to better serve the interest of all Nigerians, including workers,” Oyedele added.