The Trade Union Congress of Nigeria has called for an increase in the tax exemption threshold from N800,000 to N2.5m per annum to ease economic challenges faced by low-income earners.
The union stressed that this measure would increase disposable income, stimulate economic activity, and provide much-needed relief to workers and their families.
The president of the union, Festus Osifo, made the call in a statement on Tuesday.
He said, “We still have two items that we strongly believe should be reviewed in the tax bills that will immensely benefit Nigerians.
“The threshold for tax exemptions should be increased from the current N800,000 per annum, as proposed in the bill, to N2,500,000 per annum. This will provide relief to struggling Nigerians within that income bracket, easing the excruciating economic challenges they face by increasing their disposable income.”
On the proposed transfer of royalty collection to the Nigeria Revenue Service, the TUC president warned of potential revenue losses and inefficiencies due to the lack of technical expertise in oil and gas operations within the NRS
He said, “The proposed bill assigning royalty collection to the Nigeria Revenue Service appears beneficial on the surface but would most likely result in significant revenue losses for the government. 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.
“Additionally, 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.”
Osifo reiterated that allowing the VAT rate to remain at 7.5 percent was the best for the country.
“Allowing the Value Added Tax 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,” Osifo said.
Osifo noted that the union welcomed the inclusion of a derivation component in VAT distribution among the three tiers of government, describing it as a step toward reducing dependence on oil revenues and encouraging sub-national productivity.
He said, “On a general perspective, we welcome the inclusion of a derivation component in the Value Added Tax distribution amongst the three tiers of government. When passed into law and properly implemented, it will encourage productivity at the sub-national level, thereby moving us gradually from a total rent-seeking economy to a derivation-based system that will stimulate economic activities.”
The TUC president said the continued existence of the Tertiary Education Trust Fund and the National Agency for Science and Engineering Infrastructure would bring about progress to the nation’s education as well as engender economic development in the country.
He said, “It is also good to note that both TETFUND and NASENI will remain a going concern, as these institutions have greatly impacted the country through their respective mandates. Both have respectively been instrumental in improving our tertiary education and the adoption of homegrown technologies to enhance national productivity and self-reliance. Their continued existence is vital for sustaining progress in education, technology, and economic development across the country.”
However, the union president urged the Federal Government to adopt equitable tax policies that prioritise the welfare of citizens.
He said, “ While we deeply appreciate the Federal Government’s efforts to listen and adjust to our advocacy, we still advocate that the above concerns be considered and adopted in the Tax Reform Bill, they will be highly beneficial to the Government and Nigerian populace.
“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 evidence of great and sincere leadership. As the conversations around the Tax Reform Bill continue, it is our expectation that the focus would be equitable economic growth and improved living conditions for all Nigerians.”