The Federal Government has announced plans to increase personal income tax to 25% for Nigerians earning above N1.5 million monthly. This move aims to ensure the wealthy contribute more to government revenue and ease the tax burden on lower-income earners.
Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, disclosed this on Monday at the ongoing 30th Nigeria Economic Summit in Abuja. 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.
According to Oyedele, the proposed changes are expected to take effect from January 2025, pending passage of the bill by lawmakers. The new economic stabilisation bill seeks to reform Nigeria’s tax system, making it more equitable and efficient.
Under the proposed reforms, individuals earning less than N1.5 million monthly will be exempt from personal income tax. This move is expected to alleviate financial pressure on low-income earners and promote economic growth.
Oyedele noted that the current tax system disproportionately affects lower-income earners, with 90% of taxpayers being those who should not be taxed. The proposed reforms aim to address this imbalance and promote a more equitable tax system.
The Federal Government is also working on developing a system to automatically identify and tax high-income earners, rather than burdening low-income individuals. This move is expected to increase tax compliance and reduce evasion.
The proposed tax reforms have been welcomed by stakeholders, who see it as a step towards promoting economic fairness and reducing income inequality. However, some experts have expressed concerns about the potential impact on high-income earners and the overall economy.
As the bill makes its way through the legislative process, Nigerians will be watching closely to see how these reforms will affect their finances and the country’s economic outlook. The success of these reforms will depend on effective implementation and a commitment to fairness and equity in the tax system.
