The approval given on Wednesday by the Senate is the second in a series of legislative and executive steps to make the bill become law. The bill was read for the first time at the Senate on Tuesday.
On Wednesday, at least two senators complained, wondering how they would debate and pass a bill whose content they do not know. Senate President Ahmad Lawan overruled both senators.
The Senate then passed the second reading of the bill that seeks to increase the value-added tax (VAT) from five per cent to 7.5 per cent.
No copies of the bill were shared to senators to allow for any meaningful contribution before it was debated and passed.
President Muhammadu Buhari had, in October, presented the bill to a joint session of the National Assembly for consideration and passage into law. He made the presentation of the Finance Bill alongside the 2020 Appropriation Bill.
Before deliberations began on the bill, Binos Yaroe (Adamawa South, PDP), drew the attention of the Senate to its rules which requires that all senators must have a copy of the bill before it is deliberated upon.
He said according to the rules, every senator should have copies of the bill.
“Our rules say that printed copies of the bill shall as soon as possible be sent to every senator. We are at the stage of the second reading of this bill. I don’t know for others but I have not received the bill, I don’t know how we can debate a bill that we have not received,” the Adamawa lawmaker said asking how lawmakers could debate a bill whose content they do not know.
The Senate President, Ahmad Lawan, noted his point but said the debate would still go on.
“We are at this point going to debate the general principles of the bill and in line with our tradition, convention here, even the Appropriations Bill that we debate, we don’t have the bill normally,” he said.
Not satisfied, Betty Apiafi (Rivers West, PDP), also raised the same concern but Mr Lawan simply said “When the Senate committee on finance reports this, the bills will be made available and we can compare with what we are amending.”
He then ruled Ms Apiafi out of order.
The Lead Debate
The Senate Leader, Abdullahi Yahaya, who led the debate, said the bill has five strategic objectives.
He said they are to promote fiscal equity by mitigating instances of regressive taxation; to reform domestic tax laws to align with global best practices and to introduce tax incentives for investment in infrastructure.
Others are to support ongoing ease of doing business reforms and to raise revenues for government including the proposal to increase the value-added tax (VAT) from five per cent to 7.5 per cent.
He said the 2020 appropriation bill is based on the provisions of this bill and additional revenues will be used to fund health, education and infrastructure programmes.
The lawmaker said the states and local governments are allocated 85 per cent of VAT revenues.
He said the bill seeks to amend the following tax provisions and make them more responsive to the policies of the federal government.
(A) The company tax CAP C21 Laws of the Federation of Nigeria 2004.
(B) To reform VAT CAP 4 2007 – this is in line with global best practices. It seeks to improve the efficiency of the Nigerian VAT system.
(C ) Customs and excise tariff act CAP C49 Laws of the Federation of Nigeria 2004 – this bill seeks to subject certain goods to excise duties in similar manner of their local manufactured counterparts.
(D) Reforming personal income tax E8 laws of the Federation of Nigeria – the bill seeks to provide clarity in individual taxes of Nigeria
(E) Capital gains tax act CAP C1 laws of the federation of Nigeria 2007 – this bill seeks and cover taxation of business combinations and seeks to prevent abuse of provisions of the act on group restructuring.
(F) Stock duty act 58 laws of the federation of Nigeria – this bill seeks to increase the duty on electronic stocks and electronic consumption.
(G) Petroleum profit tax – this bill seeks to increase revenue by removing the tax exemption granted for dividends or income derived from companies charges under the act.
Mr Yahaya stated that VAT is a good avenue for generating high revenue for the government. He added that the bill will transform Nigeria’s economic fortunes.
The other lawmakers who made comments hailed the provisions of the bill and urged other colleagues to support its passage. Some of the lawmakers who spoke are Ibrahim Gobir (Sokoto East, APC), Istifanus Gyang (Plateau North, PDP), Buhari Abdulfatai (Oyo North, APC), George Sekibo (Rivers East, PDP) and Sahabi Yau (Zamfara North, PDP).
The bill was thereafter read for the second time and referred to the Senate Committee on Judiciary for further legislative work. The committee was asked to report back after two weeks.
The happenings on Wednesday about the tax bill would further fuel speculations among Nigerians that the Senate under Mr Lawan has become a rubber stamp to the dictates of the Executive; something alluded to by a senator, Ike Ekweremadu, during the screening of nominees for the board of the Niger Delta Development Commission (NDDC).
PREMIUM TIMES reported how the 14 board nominees of the NDDC who appeared before the Senate committee were asked to ‘bow and go’ without facing any serious questions from lawmakers.
Majority of the ministerial nominees by President Buhari were also asked to ‘bow and go,’ with the Senate under Mr Lawan even amending its own rules to increase the number of nominees who would benefit from such grace.