By Adedapo Adesanya

The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr Taiwo Oyedele, says the tax reform bills proposed by the administration of President Bola Tinubu will lift the tax burden on 90 per cent of Nigerian workers.

He gave this clarification while appearing before senators during the plenary to brief the lawmakers on the need to pass the bills on Wednesday.

He also explained that the bills aim to review the sharing formula of the Value Added Tax (VAT) to accommodate what each state will get for what is consumed within their territory.

Recall that in September, President Tinubu transmitted four tax bills to the National Assembly for approval. These are the Nigeria Tax Bill 2024, the Tax Administration Bill, the Nigeria Revenue Service Establishment Bill, and the Joint Revenue Board Establishment Bill.

One of the bills seeks to change the sharing formula of the Value Added Tax by reducing the federal government’s share from 15 per cent to 10 per cent. However, the bill includes a caveat that the allocation among states will factor in the derivation principle.

Mr Oyedele said if the bills are passed and assented to by the president, 30 per cent of Nigerians who earn between N50,000 to N70,000 monthly will be exempted from paying tax to the government because they are classified as poor people.

“These proposals, if approved by the Senate, will reduce the tax on 90 per cent of our workers, both in the private and the public sector, and it will exempt more than 30 per cent of our citizens who earn about minimum wage, around 50,000, 60,000, 70,000 Naira,” he said.

Mr Oyedele noted that Nigerian workers who earn above N70,000 monthly will commit to payment of taxes.

He explained that those earning N100 million monthly will pay 25 per cent of their income as tax.

“Then the remaining 10 per cent who are not so poor will now pay a little bit more. The top rate today is 24 per cent in the long, and we are proposing it goes to 25 per cent. We are doing some other reforms around allowances and relief.

“So effectively, if somebody earns 100 million Naira a month, the maximum they will pay even on that approval side is only 25 per cent. If they were in South Africa, they would be paying 41 per cent. If they were in Kenya, they would be paying 35 per cent. Of course, if they were in the UK or the US, they would be close to 40 per cent, but we are doing only 25 per cent.”

He also noted there will be changes to VAT sharing formula, adding the tax reform bills prescribed that every state will receive credit for consumption within their territory and that the state government will only have power to collect sales tax, leaving the tax on import and international services for the federal government.

“Our proposal before you is that going forward, if we have your approval for the bills, every state will receive credit for the consumption within their territory.

“Number one, every state will collect less than half of what they are getting now. Number two, businesses will struggle because you bought something in Kaduna and you are selling it in FCT. They will not allow you for the input, and the more the cost piles up, the more businesses will struggle,” he added.

He further explained that, “If states should begin to collect VAT today, they will not be able to collect import VAT. Import VAT and international VAT is about half the VAT we collect in Nigeria today. If anybody could benefit at all, it would be the federal government,” he added.

Mr Oyedele emphasised that each state will get credit for economic activities within their jurisdiction.

Mr Oyedele also said the tax reform bills will review the percentage formula for sharing VAT by the federal, state and local governments.

The current formula for sharing VAT prescribes that the federal government should take 15 per cent, the states 50 per cent and the local government 35 per cent.

The tax man noted that the reform bills will review the VAT sharing formula and make states the largest receivers among the three tier of government, as it will take 5 per cent from the FG.

“10 per cent (will go to the) federal government, 55 per cent state government and 35 per cent local government,” he said, “Provided that 60 per cent of the amount standing to the credit of states and local governments shall be distributed among them on the basis of derivation.”

By Dipo Olowookere

The hope of Nigerians getting premium motor spirit (PMS), commonly known as petrol, below N800 per litre, at least for now when the price of crude oil is less than $80 per barrel and the official exchange rate of the Naira to the Dollar is above N1,600/$1 at the currency market, may have been dashed.

This is because the Chief Financial Officer (CFO) of the Nigerian National Petroleum Company (NNPC) Limited, Mr Adedapo Segun, has said the price of the commodity from unrefined crude oil is about N800 per litre.

He made this revelation while speaking on Channels Television’s Sunrise Daily on Wednesday, monitored by Business Post.

According to him, this reality might make it impossible for the company to sell PMS to Nigerians at that price because the cost of getting the final product must be added to arrive at the actual price of petrol.

“This pricing conversation is an interesting one. What are the components of the price? I just told you that the crude [oil] unrefined is N800 per litre, a barrel of crude is about $80 (actually at $72 per barrel as of Wednesday), give or take, you have about 159 litres [of PMS) in a barrel of crude, let’s approximate it to 160 litres, that gives you 50 cents per litre [and] at N1,600 per Dollar, that’s N800 per litre.

“So, the crude itself, unrefined, is N800 per litre. Then you talk about the refiner’s margin, he has to make some money and has costs like operating the plant and other overhead costs. When you are done with these costs, you move to the wholesalers.

“[The product] is transported either by vessel or trucks. The transporter also has his margin as well as the retailer. There are also costs for the regulators and other statutory fees to be paid.

“When you look at all of these costs, what will the Port Harcourt refinery do differently than what Dangote Refinery for example is doing today?

“The only difference would be that it is closer to the people of Port Harcourt and reduces the cost of transporting things like PMS from Dangote Refinery in Lagos to Port Harcourt. That is where the savings would come, but that is very marginal. The cost of transportation is very marginal in the cost-build-up for PMS,” he said.

However, he noted that what the refineries will do to Nigeria is to create competition based on market conditions.

At the moment, the price of PMS at NNPC retail stations is N1,025 per litre in Lagos, while independent marketers sell between N1,040 per litre and N1,060 per litre.

Last week, Dangote Refinery announced a slash in its ex-depot price to N970 per litre from N990 per litre.

By Adedapo Adesanya

The NASD Over-the-Counter (OTC) Securities Exchange closed the midweek session with a 0.88 per cent depreciation after the duo of FrieslandCampina Wamco Nigeria and UBN Property Plc suffered losses.

The market capitalisation lost N9.31 billion to close at N1.053 trillion compared with the previous session’s N1.063 trillion and the NASD Unlisted Security Index (NSI) recorded a slide of 26.54 points to end the day at 3,006.38 points as against 3,032.92 points it recorded at the previous session.

The volume of securities traded at the bourse witnessed a surge as investors exchanged 1.0 million units, which is 208.4 per cent higher than the 327,425 units transacted by market participants at the last session.

However, the day’s trading data showed that the total amount of stocks traded at the midweek session slid by 86.9 per cent to N2.1 million from the N15.7 million quoted on Tuesday.

These transactions were completed in three deals compared with the nine deals carried out a day earlier, representing a decline of 66.7 per cent.

FrieslandCampina Wamco Nigeria shed N4.39 yesterday to trade at N39.51 per unit versus Tuesday’s closing price of N43.90 per unit and UBN Property Plc recorded a 13 Kobo depreciation to sell at N1.67 per share, in contrast to the preceding session’s N1.80 per share.

At the close of business, Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units worth N3.9 billion, followed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.3 million units sold for N5.3 million.

Also, Aradel Holdings Plc remained the most active stock by value (year-to-date) with 108.7 million units worth N89.2 billion, Okitipupa Plc came next with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc was in third with 297.3 million units sold for N5.3 billion.