Income tax increase ‘ll erode minimum wage gains for low earners -Confab warns

A consortium of experts have warned that any increment in income tax would erode the expected gains of the N70,000 minimum wage and other negative effects on the nation’s struggling economy.

They gave the warning in a communique on Wednesday in Abuja at the end of a two-day 2024 National Tax Conference, organized by the Tax Justice and Government Platform organised by Civil Society Legislative Advocacy Centre (CISLAC), ActionAid Nigeria (AAN), Oxfam in Nigeria, Centre for Democracy and Development (CDD), Christian Aid, International Budget Partnership, NLC and other partners.

The conference, themed “Economic Stabilization for Equity: Ensuring Fairness in Fiscal Reforms,” gathered 173 participants from various sectors, including government, civil society, labour unions, and the media among others.

Key recommendations of the communique, jointly signed by 35 of the nation’s notable CSOs include making the tax system more progressive to ensure that high-net-worth individuals and large corporations contribute their fair share.

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Participants warned that the proposed increase in Personal Income Tax (PIT) rates could undermine recent minimum wage gains for low-income earners.

They, instead, recommended capping the second tax bracket at 10% and increasing the rate for those earning above N50m to 26% to balance revenue needs with economic realities.

The conference also called for greater transparency regarding Value Added Tax (VAT) compliance rates, urging the Presidential Committee to publicly share data that highlights challenges and potential solutions.

They also emphasised the importance of legislative support from the National Assembly to pass tax harmonization bills and digitize tax administration processes.

“Public education campaigns were deemed essential to clarify the objectives of fiscal reforms, while platforms for citizen engagement were recommended to ensure broader participation in policy formulation,” the communique said.

Also, a portion of any increased revenue should be redistributed to benefit lower tax brackets and vulnerable populations, including women, girls, and persons with disabilities (PWDs).

Participants cautioned against raising VAT rates during periods of high inflation, advocating instead for an expansion of VAT exemptions on essential goods such as food and energy sources.

The conference called for unified reforms that align fiscal policies with equity and economic stabilization, emphasizing a collective commitment to building a fair and inclusive tax system that promotes sustainable development for all Nigerians, collectively.