In a renewed push to enhance fiscal clarity and end overlapping tax regimes, the House of Representatives has commenced deliberations on a constitutional amendment bill aimed at addressing multiple taxation in Nigeria and redefining the fiscal boundaries between the three tiers of government.
The proposed legislation, sponsored by the Deputy Speaker of the House, Rt. Hon. Benjamin Okezie Kalu, alongside six co-sponsors, seeks to amend the 1999 Constitution to provide explicit definitions of taxation powers for the Federal, State, and Local Governments.
It also aims to prevent unlawful outsourcing of tax collection, streamline levies, and foster fiscal transparency across Nigeria’s tax ecosystem.
Addressing multiple taxation in Nigeria: A step toward fiscal order
Leading the debate on the general principles of the bill titled “A Bill for an Act to Alter the Constitution of the Federal Republic of Nigeria, 1999 (as Altered), to Clarify the Taxation Powers of the Federal, State, and Local Governments; Define the Scope of Taxes and Levies Collectible by Each Tier of Government; Prevent Multiple Taxation and Unlawful Outsourcing of Revenue Collection; and for Related Matters (HB.2545)”, Rt. Hon. Kalu said the initiative was born out of the need to “bring order where confusion reigns and clarity where overlaps persist.”
According to him, multiple taxation in Nigeria has long burdened individuals and businesses alike, stifling productivity and discouraging investment.
“Our fiscal structure has become congested and conflicting. Different tiers of government now impose similar or overlapping taxes on the same taxpayers, leading to inefficiencies, disputes, and a loss of public trust,” Kalu explained.
He cited ongoing disputes between federal and state authorities over Value Added Tax (VAT), Stamp Duties, and Personal Income Tax as examples of how undefined tax powers have fueled tension and confusion.
“The absence of a clear constitutional demarcation has created chaos and eroded accountability,” he added.
Key reforms proposed in the constitutional amendment
The amendment bill introduces several critical provisions designed to restore harmony and fairness in Nigeria’s tax system while curbing the menace of multiple taxation. Among the reforms are:
- Jurisdictional clarity on Stamp Duties: The bill stipulates that Stamp Duties on corporate transactions shall remain under federal jurisdiction, while those relating to individuals fall under the purview of state governments.
- Uniform Value Added Tax structure: VAT or consumption tax is proposed as a distinct item on the Exclusive Legislative List to provide a clear constitutional basis for its administration nationwide.
- Ban on outsourcing tax collection: The bill expressly prohibits the use of private consultants for tax collection, a practice Kalu described as unlawful and prone to abuse. He said such outsourcing encourages corruption, harassment, and revenue leakages.
- Cap on number of taxes per individual or business: The legislation proposes a maximum of nine taxes or levies that can be imposed on any taxpayer within a fiscal year, curbing arbitrary taxation by multiple agencies.
- Streamlined local government taxation: To support small-scale enterprises and informal traders, the bill recommends a simplified framework for local government levies, ensuring fair treatment and consistency across jurisdictions.
Fiscal transparency and economic growth at the heart of reform
Rt. Hon. Kalu emphasized that resolving multiple taxation in Nigeria is crucial to achieving fiscal transparency, economic stability, and investor confidence.
He explained that when government revenues are traceable and taxes predictable, it enhances budgetary discipline and planning efficiency.
“If this Bill is passed, it will strengthen fiscal discipline, improve budget predictability, and restore public confidence in the tax system,” he said.
“Through this amendment, we can lay the constitutional foundation for a fiscally disciplined, transparent, and efficient Nigeria.”
The Deputy Speaker also highlighted that the bill aligns with global best practices in public finance management and the principles of equity and accountability in taxation.
He assured that the proposal would not only reduce intergovernmental disputes but also ensure that every naira collected is used for public good.
Support for the initiative and next steps
Several lawmakers who contributed to the debate praised the initiative as a long-overdue reform capable of modernizing Nigeria’s fiscal framework.
They noted that clear tax boundaries will prevent double taxation, enhance ease of doing business, and strengthen the country’s economic competitiveness.
Experts in public finance have also expressed optimism that the amendment could pave the way for a more transparent and growth-driven tax administration if effectively implemented.
According to analysts, the uniform taxation framework proposed in the bill could help Nigeria attract more local and foreign investments, especially in manufacturing and small-scale industries that have long suffered from excessive levies.
The bill was subsequently referred to the House Committee on Constitution Review for further legislative work and harmonization before presentation for second reading and public hearing.
A path toward ending multiple taxation in Nigeria
As Nigeria continues to navigate economic reforms under fiscal constraints, addressing multiple taxation in Nigeria has become a national priority. The proposed constitutional amendment marks a decisive step toward restoring order, ensuring fairness, and promoting transparency in revenue generation.
With the potential to reduce tax-related conflicts and streamline revenue collection, the legislation — if passed — could usher in a new era of fiscal coordination and efficiency across all levels of government.
