Private Sector Applauds Government’s Plan to Cut Taxes on Essentials
The Federal Government’s proposal to withdraw taxes on essential goods and services, including food, house rents, and public transportation, has been met with widespread approval from Nigeria’s Organised Private Sector (OPS). The proposal, part of the broader recommendations by the Presidential Committee on Fiscal Policy, aims to alleviate the financial burdens on citizens struggling with the rising cost of living.
The committee, chaired by Taiwo Oyedele, disclosed the plan during an interview with Channels TV on Tuesday, highlighting the government’s intent to exempt these basic necessities from value-added tax (VAT) and other levies. “We’ve taken into account what are those basic necessities of life—food, accommodations, transportation, education, and health. We’ve deliberately identified those items and removed almost all the taxes applicable to them, including no VAT,” Oyedele stated.
This initiative is expected to be signed off by President Bola Tinubu before being presented to the National Assembly for integration into the country’s tax laws. The objective is clear: to make life more affordable for Nigerians by reducing the tax burden on essential services. For example, while public transport will be tax-free, private taxi services will remain taxed, reflecting the government’s nuanced approach to taxation based on economic stratification.
The move has been praised by various industry leaders. Dr. Femi Egbesola, National President of the Association of Small Business Owners of Nigeria, described the tax relief as a significant gesture of government sensitivity towards the plight of ordinary citizens. “It is a big relief that the government is feeling the plight of the common man,” Egbesola remarked. However, he cautioned that while the tax cuts are welcome, they are not a panacea for the broader economic challenges facing the country. “The government needs to be more proactive in addressing issues like inflation, ease of doing business, insecurity, and corruption. Tax holidays are helpful, but not a sustainable solution.”
Segun Ajayi-Kadir, Director-General of the Manufacturers Association of Nigeria (MAN) and a member of the Presidential Committee, echoed these sentiments. He highlighted that the proposed tax exemptions are aimed at increasing the disposable income of Nigerians, which in turn would stimulate consumer spending and provide much-needed relief to manufacturers burdened by unsold inventories. “Boosting the disposable income of the average Nigerian is crucial. It’s a good recommendation,” Ajayi-Kadir affirmed.
The Centre for the Promotion of Private Enterprises (CPPE) also welcomed the proposal but urged the government to extend tax relief to energy-related sectors. Dr. Muda Yusuf, Director of CPPE, praised the planned removal of taxes on public transportation as a step in the right direction but pointed out that the impact might be limited given the informal nature of the sector. He also advocated for tax exemptions on solar panels, inverters, and compressed natural gas (CNG) conversion kits, which are essential for reducing the country’s energy costs. “While we commend the government, these are other areas they should consider,” Yusuf suggested.
As Nigeria grapples with economic challenges, the proposed tax reforms offer a glimmer of hope. However, industry experts agree that more comprehensive measures are needed to address the root causes of the nation’s financial woes and to ensure that the benefits of such policies reach all Nigerians.
