The House of Representatives Wednesday passed for second reading a Bill that would prohibit the outsourcing of tax collection to private entities.
The bill titled, “Bill for an Act to alter the Constitution of the Federal Republic of Nigeria, 1999 (as amended), to Clarify the Taxation Powers of the Federal, State, and Local Governments; to Define the Scope of Taxes and Levies Collectible by Each Tier of Government; to Prevent Multiple Taxation and Unlawful Outsourcing of Revenue Collection and for Related Matters,” was sponsored by the Deputy Speaker, Hon. Benjamin Kalu, and six other lawmakers.
Leading the debate on the Bill at the plenary on Wednesday, Hon. Joshua Gana said in many instances, private consultants or agents are unlawfully contracted to collect taxes and levies, giving room for corruption, harassment, and revenue leakages.
To this end, he noted that the Bill seeks to bring order where confusion reigns, to create clarity where overlaps have persisted, and to ensure that every Naira raised, shared, or spent by the government is traceable, lawful, and transparent.
The lawmaker emphasised that revenue agencies overlap, creating inefficiencies and litigations over collection rights; as seen in the disputes over Value Added Tax (VAT), Stamp Duties, and Personal Income Tax.
Gana pointed out that these dysfunctions weaken the ability to plan budgets accurately, erode investor confidence, and alienate citizens from the government.
The Bill also seeks to clarify the taxation powers of the federal, state, and local governments.
He explained that at the heart of this Bill is a simple but transformative goal which is to align the revenue powers of the Federation, States, and Local Governments in a way that promotes efficiency, discourages duplication, and restores trust in the fiscal system.
Gana argued that the fiscal architecture of the country has, over time, become congested and conflicting.
He noted that multiple taxes and levies are imposed at different tiers of government, often on the same taxpayer.
He said: “To strengthen our budgetary process, therefore, we must first strengthen the foundation of fiscal order, and that is precisely what this Bill does.”
Gana added that the Bill which comprises four Clauses which seeks to provide for the clarification that Stamp Duties collected by the federal government apply only to documents or transactions involving a corporate body, while Stamp Duties arising from transactions by individuals fall within the jurisdiction of States.
He noted that the Bill seeks to introduce a new Item 59 Value Added Tax (VAT) or Consumption Tax as an express item on the Exclusive Legislative List, ensuring national uniformity, predictability, and a clear constitutional basis for VAT administration by the federation, “prohibit the outsourcing of tax collection to private entities.”
Gana stressed that the Bill also seeks to introduce a ceiling to the maximum number (of nine) of taxies, levies or charges that may be imposed on income, consumption or property of a person in a year.
The Bill seeks to streamline taxation by local government councils and to strike out redundant or overlapping taxing powers so as to prevent harassment of traders, artisans, and small businesses at the local level.
Gana emphasised that if the Bill is passed, it would reduce intergovernmental conflicts over revenue collection; strengthen fiscal coordination across the three tiers of government; and enhance budget predictability, enabling governments to plan expenditures on the basis of stable, clearly defined revenue streams.