TINUBU’S TAX REFORM IS ANTI-POOR

• CDWR Advocates Progressive Taxation (Heavy Taxes on Big Business Profits and Billionaires’ Lifestyle)

The Campaign for Democratic and Workers Rights (CDWR) strongly holds that the proposed tax reform by the Bola Tinubu government, currently before the National Assembly, is primarily designed to reduce the tax being paid by big businesses while the low-income earners pay more. The working people must reject the tax reform that tends to place a greater burden on them in addition to the prevailing anti-poor policies which have devastated their living standards.

CDWR recognizes that the Tax Reform Bill grants relief to workers whose annual salaries are less than N800, 000. But in reality there are no such workers in the public sector except they do not enjoy the current minimum wage. In the private sector, it is casual workers who are illegally denied the right to minimum wage and decent work conditions who can benefit from the relief. In any case, in the face of devastating effects of the anti-poor policies of Tinubu government such a relief is incapable of reducing the poverty imposed on such workers.

The current disagreement between different sections of the capitalist elite over the sharing formula for the Value Added Tax is essentially in reality over who have greater access to taxpayer money for their self-serving interest. It is not about the interest of the working masses and the poor of their region or ethnic origin.  The initial proposal may change as the bill is passed into law.  But whatever it is, it will remain a cake to be shared by the different ruling elite in a such a way that secures the unfair privileges of a few at the expense of the vast majority working people.

The tax bill also seeks to gradually reduce the revenue accrued to the Tertiary Education Trust Fund (TETFUND) and other education agencies ((NASENI and NITDF) from 2025 to 2030 when it will be eventually scrapped while levy on company’s profit will reduce from 4% to 2% in 2030 when all 2% will only fund Student Loans. TETFUND currently provides useful but limited infrastructure and facilities that exist in most tertiary institutions in Nigeria. Therefore, a scrap of TETFUND could further increase the already obnoxious fees charged by tertiary institutions, beyond the capacity of many students from working class and the poor families. The tax reform is a further proof that Student Education Loan Fund is designed as a justification for the abdication of responsibility to adequately fund public tertiary education by the government.

As stated earlier the main agenda of the tax reform is to increase revenue and make the working class pay more through a regressive tax system. For instance the Section 146 (c) of the Nigeria Tax Bill has increased the percentage of VAT charged on goods and services from 7.5% to 10% in 2025, 12.5% from 2026 to December 2029 and from January 2030 to 15% irrespective of the social status of VAT payers. In view of the low purchasing power and growing poverty, VAT increment will exacerbate the current cost of living crises, affect production, services and create more joblessness and poverty. The proposed VAT increment is never a subject of disagreement between the thieving ruling elite but due to widespread opposition, the ruling elite may be forced to retain the current rate or review downward the proposed rate in the bill.

Besides the fact that most workers and poor people are made to pay more taxes, juicy tax incentives and exemptions are awarded to some big businesses and billionaires. Section 60 and Second Schedule of the Nigeria Tax Bill exempt big business concentrated at the Export Processing and Free Trade Zone from paying taxes except where such businesses sell below 75% of its produce in the customs territory. Dangote Petrochemical worth about $20 billion is one of such businesses enjoying tax free venture. Similarly, under the current tax regime, big companies (over N100 million annual turnover) pay 30% of profits while medium companies (over N25 million to N100 million turnover) pays 20% profit rate but Section 56 of Nigeria Tax Bill has reduced tax payable by big companies to 27.5% in 2025 and further reduction to 25% in 2026.

Concessions and incentives to big businesses continue in Sections 167 and 187 of the Nigeria Tax Bill wherein the so-called big business priority sectors including petrochemical and gas companies are awarded Tax Incentives including tax holidays. Aside from tax waivers, exemptions and incentives usually awarded to many big businesses, the capitalists usually use all manners of falsifications to pay little or no tax including using experts to doctor the financial books. CDWR opposes the proposed reduction in the tax to be paid by companies as stipulated in Section 56 of Nigerian Tax Bill 2024 wherein the tax rate will be reduced from 30% to 27.5 in 2025 and 25% from 2026. Rather than legislate a reduction for big companies, the currently rate of 30% should be increased to enable more workers to be exempted.

CDWR holds the position that  there is the need for the wealthy, and big companies which make super profits to be taxed heavily while all workers earning N250,000 and below monthly should be exempted. CDWR believes that only workers who have adequately met their basic needs that should be taxed the same way companies’ profit is taxed after all expenses have been deducted. In other words, all workers whose salaries cannot meet their basic needs should be exempted from taxation.

CDWR holds the view that the capitalist ruling elite cannot tax or levy the country into prosperity. There is the need for a planned economy and nationalization of the commanding heights of the economy under democratic control of the working class. This is in order to generate more resources and ensure their judicious use for the benefits of the vast majority.

SYMPOSIUM

The CDWR held a symposium on the Tax Reform Bill on Tuesday March 11, 2025 to discuss and put forward a pro-masses tax positions. The symposium took place in Lagos and had participants from eight trade unions and seven civil society and pro-labour organisations. CDWR also presented its position on the tax reform through the launch of its pamphlet titled: “Tinubu’s Tax Reform will compound the Economic Crises; CDWR Demands a Progressive Tax System.” The discussion was led by a tax expert, Mr. Lanre Akinola.

The symposium participants unanimously agreed to retain the intervention funding in tertiary institutions through TETFUND but subjected to democratic and transparent management structure that includes the union representatives in the management board side by side adequate funding of education at all levels. The participants also opposed the increment in VAT rate, reduction in tax that will be paid by big companies and other tax concessions to big business.

The participants also called on the two trade union centres (Nigeria Labour Congress and Trade Union Congress) to urgently harmonize their positions and present a common position that defends the working class and the poor. NLC and TUC should also mobilise for mass struggle to defend the position.

Read full report of symposium here