Finance Bill 2020 and minimum wage earners

As the newly initiated Finance Bill 2020 undergoes legislative processes, President Muhammadu Buhari, this week, said minimum wage earners would not be affected by its provisions.


Specifically, the president said the Finance Bill 2020 has, in its provisions, the plan to exempt minimum wage earners from the payment of Personal Income Tax (PIT).


Represented virtually by Vice President Yemi Osinbajo, the president spoke at the opening session of the 26th Nigerian Economic Summit Group Conference themed: “Building Partnerships for Resilience.”


The president said the exemption of the minimum wage earners from the personal income tax would reduce the impact of inflation on Nigerians. “We are proposing in the new Finance Act that those who earn minimum wage should be exempted from paying income tax,” he said.


Exempting the low income earners, the president rightly said, will complement the tax breaks given to small businesses last year to stimulate the economy.


As well, the president said, the measure is in fulfilment of promises made by the present administration to reduce the costs of transportation and the impact of inflation on ordinary Nigerians.


And it cannot be argued that in order to stimulate the economy and tackle inflation, doing so through the PIT is among the best ways to go.
After all, personal income tax is a statutory obligation imposed by the government on the incomes of individuals, communities and families, trustees or executors of any settlement.


In Nigeria, PIT is guided by the Personal Income Tax Act Cap P8 LFN 2004 (as amended). Although PIT is a federal obligation, it is mandatory that PIT is remitted to the inland revenue service of the state in which they reside, irrespective of the institutions or bodies they work for which could be the federal, state or local governments or private organisations.


PIT remitted to the Federal Inland Revenue Service (FIRS) only applies to staff of the Ministry of Foreign Affairs, other Nigerians and foreigners outside the country but earning income in Nigeria (non-residents), police officers, and military officers.


There are two types of Personal Income Tax. They are Pay-As-You-Earn (PAYE) which is a scheme in which personal income taxes are deducted from the salaries or wages of the employee by the employer and remitted it to the relevant tax authority.

There is also the Direct Assessment. This scheme applies to self-employed individuals. The self-employed individual will without notice or demand, file a return of income earned in the preceding year and pay the requisite PIT to the relevant tax authority.


No doubt, taxes are important as they pay for many of the things that are fundamental to functioning of Nigeria, such as schools, healthcare and social services.

And money raised through taxation is crucial to ensuring that these services are maintained even during the COVID-19 crisis. But, when businesses shut down and many lose their jobs, as has happened during the current health and economic crisis occasioned by the coronavirus, businesses suffer and tax revenue plummets.


Thus, at a time like this, when revenues plummet and the economy goes into the recession gear, the Buhari-led administration should be saluted for introducing stimulus packages, and a wide array of measures to help the economy, businesses and citizens get back on their feet.


But, in the longer term, these stop-gap measures will not be enough to fix many of the underlying problems plaguing the Nigerian economy, which include growing inequality among its citizens.

Before the COVID-19 pandemic, the growing gap between rich and poor was already a cause for concern, but, now, the situation is worrisome.
However, it should be noted that creating a fairer society is not only about redistributing wealth.

It is also about putting in place policies that help people to gain sustainable, decent work.
Though globalisation has affected all open economies, still, countries with effective redistributive tax and benefit systems have been able to avoid sharply rising inequality among their citizens.


But, in the end, redistribution on its own is not enough. It has to go hand-in-hand with a host of other measures, such as retraining, reorientation of workers and citizens and supporting jobs.


Essentially, in thinking about equity and economic growth and national development, it is important to look at both sides of the equation, not only taxes, but how the money is spent with a view to fighting corruption and improving the quality of lives of Nigerians.

Professor Ibrahim Gambari at 76

No doubt, finding the perfect way to wish someone dear to your heart and central to your work happy birthday can be difficult.

Still, President Muhammadu Buhari has managed to describe his Chief-of-Staff, Professor Ibrahim Gambari, as “a remarkable public servant who has put his vast experience and knowledge to the service of the world.”

In a statement on the occasion of Gambari’s 76th birthday anniversary, the president said: “I am proud of his accomplishments as a senior diplomat. It’s impossible to interact with Gambari without being impressed by his erudition and colossal experience in his chosen career.”

Of course, few people know Gambari the way the president does. Having worked with Gambari during his time as a military head of state, when Gambari served as a Minister of External Affairs, there can hardly be a person better than the president to describe who Gambari is.

On Gambari, often described as a consummate academic and intelligent person, the president said: “I am proud to testify that he is one of the most brilliant, dedicated, patient and humble public officials I have ever met. “Gambari’s passion for service and patriotism is enviable and worthy of emulation by Nigerians who are seeking to excel in their chosen careers.”

Gambari has held several leadership positions at the national, regional and international levels and has built extensive contacts with governments and public and private institutions, especially in Africa.

He was the Chairman of the United Nations Special Committee Against Apartheid (1990-1994) during which he worked closely with African governments to coordinate UN policy to eradicate apartheid, thereby building trust and confidence with governments and policymakers in member countries of the Southern African Development Community (SADC).

At the global level, Gambari was Under-Secretary-General and Head of the United Nations Department of Political Affairs (2005-2007). In that period, he also operated as UN Secretary-General’s Special Envoy on Cyprus, Zimbabwe and Myanmar.

On 22 May 2007, the Secretary-General entrusted him with the Good Offices Mandate on Myanmar.

He was also appointed in 2007 by the Secretary-General as Under-Secretary-General and Special Adviser on Iraq Compact and Other Issues, positions he held until 2009.

Before joining the United Nations, Gambari served as Ambassador and Permanent Representative of Nigeria to the United Nations. He worked closely with regional leaders, institutions and governments, particularly within the Economic Community of West African States (ECOWAS) on the economic and political development of the sub-region.

He was also the Director-General of the Nigerian Institute of International Affairs (NIIA), Lagos.

Therefore, in some ways if not all, Gambari can be said to have seen, heard and done all and, in the process, distinguished himself.

Though Gambari has attained the old age of 76, the truth is, how old or young you are has nothing to do with who you really are. Age is a testament to how much you’ve lived, and Gambari has lived well.

Prayerfully, Gambari will have the greatest of special days, a great year and an even greater lifetime.

But, most importantly, like the president has said, as Gambari clocked 76 years, may Allah grant him better health and longer life in order to serve Nigeria and humanity ever more.


Happy birthday, Sir!

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