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From Adanna Nnamani, Abuja
The Trade Union Congress of Nigeria (TUC) has proposed increasing the annual tax exemption threshold from N800,000 to N2.5 million, citing the need to ease the financial burden on struggling Nigerians due rising inflation, unemployment, and cost of living.
In a statement signed by its President, Festus Osifo, on Tuesday, TUC said the current threshold of N800,000 does little to address the economic challenges faced by many Nigerians.
It noted that increasing it to N2.5 million would increase disposable income for those within the affected income bracket and provide much-needed relief.
The TUC also commended key decisions made during negotiations between state governors and federal government representatives, including maintaining the Value Added Tax (VAT) rate at 7.5% and ensuring the continued operations of TETFUND and the National Agency for Science and Engineering Infrastructure (NASENI). “Allowing the Value Added Tax (VAT) rate to remain at 7.5% is in the best interest of the nation, as increasing it would place an additional financial burden on Nigerians, many of whom are already struggling with economic challenges. At a time when inflation, unemployment, and the cost of living are rising, imposing higher taxes would further strain households and businesses, potentially slowing economic growth and reducing consumer purchasing power,” it stated.
The union praised TETFUND and NASENI for their significant contributions to tertiary education and homegrown technological advancements, noting that both institutions are critical to fostering national productivity and self-reliance.
Additionally, the TUC welcomed the inclusion of a derivation component in the VAT distribution formula among the three tiers of government.
It argued that this move, if properly implemented, would encourage sub-national productivity and gradually transition Nigeria from a rent-seeking economy to one driven by derivation-based revenue generation.
However, the TUC raised concerns about a provision in the proposed tax reform bill that assigns royalty collection to the Nigeria Revenue Service (NRS).
The union argued that this would lead to inefficiencies due to the lack of technical expertise within the NRS to handle oil and gas operations, which is currently managed by the Nigeria Upstream Petroleum Regulatory Commission (NUPRC).
It stated that, “Royalty determination and reconciliation require specialised technical expertise in oil and gas operations, which NUPRC possesses but NRS lacks, potentially leading to inaccurate assessments and enforcement issues. this shift would create regulatory burdens, increase compliance costs for industry players, and reduce investor confidence due to overlapping functions and inefficiencies between NUPRC and NRS.”
The TUC urged the federal government to address these concerns in the tax reform bill to ensure equitable economic growth and improved living conditions for Nigerians.
“The Trade Union Congress of Nigeria has a shared responsibility to promote policies that improve the lives of Nigerians amongst whom are workers. We believe that proactive measures when implemented are for the maximum good of the citizens and are evidences of great and sincere leadership,” it added.
