Who really noticed that, by this proposed Economic Stabilisation Bill of 2024 of the Federal Government of Nigeria, an additional Tax Relief and Allowance are politically proposed to be given to the suspecting and unsuspecting Nigerians and from N200,000 to N400,000 respectively?Tax Reliefs and Allowances are politically meant to reduce the tax burden of the individual personal incomes taxpayers and in recognition of their personal financial responsibilities.
Put differently, Tax Relief and Allowances are tax deductions allowed to an individual taxpayers, in a year of assessment and with view to reduce the chargeable income of such individuals!In Nigeria, prior to the Personal Income Tax Act (PITA) of 2004, personal income taxpayers are given Tax Reliefs and Allowances, in tandem with their personal financial and social responsibilities, such as whether a person is married or not; the number of children a person have; whether the person lives with his aged parents or not; whether a person adopted any children or not; whether a person is physically challenged or nor etc – each factor here, is allocated certain amount of money, as tax relief and allowances!It was the PITA of 2004 that consolidated all the above tax reliefs and allowances, into one relief and allowance, called “Consolidated Relief and Allowances (CRA) and calculated as N200,000 or 1% of a person’s Gross Income plus 20% of Gross Income – whichever of these two is higher, is what is taken as the person’s total tax reliefs and allowances, and notwithstanding his or her social and personal financial responsibilities! It was this CRA that the Federal Government of Nigeria, through the proposed Economic Stabilisation Bill of 2024, that FGN politically seeks to among other things amend from the higher of N200,000 or 1% of the Gross Income plus 20% of Gross Income to now the higher of N400,000 or 1% of Gross Income plus 20% of Gross Income and may be as an additional palliative measures and with view to reduce if not eliminate, the negative effects of fuel subsidy removal in Nigeria! It may interest some of us, to know that, apart from the above mentioned Consolidated Relief Allowance (CRA), the suspecting and unsuspecting Nigerians, also enjoy the following Tax Deductions and before their personal income tax amount are arrived at:
1. National Housing Fund (NHF) Contributions – 2.5% (Employee contribution only) of the Basic Monthly Salary, for all income earners in Nigeria of up to N3,000 per annum and based on the National Housing Fund (NHF) Act of 1992 of the Federal Government of Nigeria;
2. National Health Insurance Scheme (NHIS) Contributions – which is 15% (10% for Employer and 5% for Employee) of the Basic Monthly Salary of the Employee – and based on the National Health Insurance Scheme (NHIS) Act of 1999 of the Federal Government of Nigeria;
3. Contributory Pension Scheme (CPS) Contributions – which is 18% (10% for Employer and 8% for Employee) of the Basic Monthly Salary plus Transport and Housing Allowances of the Employee – and based on the Pension Reform Act of 2014 of the Federal Government of Nigeria;
4. Life Insurance Premium Contributions – for Employees and his or her Spouse – and based on the Pension Reform Act (PRA) of 2014 of the Federal Government of Nigeria; and5. Retirement Benefits – pension and gratuity payments are tax deductibles – based on the Pension Reform Act (PRA) of the Federal Government of Nigeria!
*My humble and gentle proposal is for the Tax and Zakat Payers, in Nigeria to urgently use this political opportunity of this proposed Economic Stabilisation Bills of 2024, to be legislated at the floor of the National Assembly of Nigeria anytime from now, and with view to make case for the Tax Deductibility of Zakat payments in Nigeria and in line with the global best practices and with view to reduce the tax burden of these Tax and Zakat Payers respectively – indeed, Zakat and Tax can be economically construed, as the same macroeconomic variables, in the Social Welfare Function of the Governments and across all level of governance; or how do you see it, ladies and gentlemen?*
Jaumiraawo (Allah) woni andudo is a Fulani way of saying God knows the best!*
©️ Engr. Kabiru el-Hussain Rumah, Jakadan Rumah, Founder of Jakadan Rumah Foundation (JRF), Katsina State, the Home of Hospitality!*