Millions of people in the United Kingdom are expected to benefit as the government begins consultations on suspending tariffs on more than 120 everyday essential items.

The UK government announced on Wednesday that the products covered under the proposed policy have been published, building on the tariff suspension initiative first introduced in April.

The list of 125 items includes garlic, avocados, mangoes, nectarines, vegetable oil, chocolate, sauces, soft drinks, fresh fruits and vegetables, olive oil and baked beans.

Authorities said the government would engage businesses and other stakeholders before implementing the plan, while also increasing mileage rates for about three million people who use their personal vehicles for work purposes.

The government is equally seeking public and industry input on whether suspending tariffs on certain fertilisers could help farmers manage rising production costs linked to the ongoing conflict in the Middle East.

Chancellor of the Exchequer, Rachel Reeves, said the administration was introducing measures to cushion the impact of global economic pressures and keep household prices under control.

According to Reeves, the fuel duty freeze, increase in mileage rate — the first adjustment in 15 years — and temporary VAT reductions form part of broader efforts to ease financial pressure on residents and businesses.

She noted that the relief measures recognise the exposure of farmers and transport operators to high fuel costs and their critical role in maintaining supply chains across the country.

“We are a government firmly on the side of drivers, and that means acting when hardworking people are being left out of pocket,” Transport Secretary Heidi Alexander said.

The government said the proposed tariff suspension is expected to lower import costs, reduce pressure on food prices and support economic stability amid global inflation concerns.

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Following a closed-door deliberation lasting over two hours, the red chamber ratified recommendations from its finance panel, chaired by a key northern legislator. The measures now move to the lower legislative house and require executive authorization before they become enforceable instruments.

One of the approved policies introduces a new basis for allocating proceeds from value-added economic activities, replacing prior location-based criteria with end-user consumption as the determinant. Under this model, central authorities will retain a 10% share, sub-national entities will receive 55%, and grassroots administrations are assigned 35%. Among regional governments, distribution will consider equal share (50%), population size (20%), and location of end-use (30%), while the grassroots tier follows a slightly adjusted formula. A proposed reduction in collection fees from 4% to 2%—including revenue derived from extractive sectors—was accepted during deliberations.

The second measure formalizes the reconstitution of the primary revenue entity, appointing the national chief executive as chair of its supervisory board, with a Senate-approved deputy leading operational affairs. The structure includes regional representation, ensuring a spread of appointments across the country’s six major zones, with safeguards against dual appointments from any single state.

Expanded mandates for the restructured entity include overseeing corporate levies, driving policy modernization, and pursuing illicit financial activities linked to non-compliance. The proposal sets financial and custodial penalties for failure to register, declare earnings, or maintain accurate records, with fines ranging from tens of thousands of naira to potential imprisonment.

Presiding officers of the chamber praised the process and those who mediated disputes, asserting that the final framework was shaped by consensus rather than sectional interests. One senior figure noted that a special internal committee played a pivotal role in reconciling early disagreements, paving the way for broad legislative alignment.

Two additional components of the fiscal reform package are scheduled for review during the next plenary session.

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According to Oyedele, the suggested changes aim to create a “fairer system” by basing VAT distribution on the location of consumption rather than solely on where VAT is collected.

Oyedele’s clarification comes in response to recent opposition from the Northern States Governors Forum (NSGF), which has rejected the proposed amendments in the Tax Bill currently under consideration by the National Assembly. Northern governors argue that the derivation model could disadvantage states with lower VAT-generating activities. In a communique issued after their joint meeting with the Northern Traditional Rulers Council, the governors urged lawmakers to “oppose any bill that jeopardizes the well-being of our people.”

The proposal by the federal committee, according to Oyedele, would ensure that states generating goods or services that are VAT-exempt, or consumed in other regions, would still receive recognition for their contributions. He noted, “A state that produces essential goods shouldn’t lose out because its products are VAT-exempt. The state of origin should be acknowledged for its contributions.”

Despite the pushback, Oyedele confirmed that the committee is seeking a balanced solution, noting that they plan to work with stakeholders across all regions. He clarified that the proposed reforms focus on VAT distribution and do not call for a reduction in the federal government’s share of overall federation revenue. The recommendation, Oyedele added, aims to increase the share allocated to state and local governments from 85% to 90%, with the intention of discontinuing multiple forms of consumption taxes that currently create an additional tax burden on businesses.

The ongoing VAT reform debate reflects broader concerns about fiscal equity, as both federal and state leaders navigate challenges around taxation and revenue sharing amidst Nigeria’s current economic strain.

Meanwhile, former Independent National Electoral Commission (INEC) Chairman, Professor Attahiru Jega, expressed concerns over Nigeria’s economic policies being influenced by international organizations like the World Bank and International Monetary Fund (IMF). Speaking at the Chartered Institute of Directors of Nigeria (CIoD) Annual Directors’ Conference, Jega cautioned the government to be wary of taking all advice from these institutions, warning that such policies might lead to long-term issues despite short-term benefits.

Senator Ali Ndume, representing Borno South, echoed similar sentiments, urging the federal government not to burden the poor with more taxes. Ndume highlighted the economic hardships facing average Nigerians, particularly those in poverty, and advocated for a tax approach that targets wealthier individuals and corporations.

As debates around taxation policies and economic direction continue, Nigeria’s leaders face the challenge of balancing fiscal responsibility with the pressing need for social equity.

The post Oyedele Defends New Tax Bill, Says Proposed Amendment Meant to Usher Fairer Template for VAT Distribution appeared first on Housing TV Africa.

Top 10 sectors by VAT contributions in 2023 highlight their economic significance, growth trends, and ongoing challenges they face:

Construction Sector:
Experiencing a remarkable 72% increase in VAT payments, the Construction sector’s contributions surged from N18.9 billion in 2022 to N32.5 billion in 2023. Despite challenges like fluctuating material costs and a skilled labor deficit, the sector is witnessing robust development.

Professional, Scientific, and Technical Activities:
VAT contributions from this sector rose by 17%, reaching N33.4 billion in 2023 from N28.7 billion in 2022. The growth signifies the growing demand for specialized professional services amid challenges related to innovation, regulation, and global competition.

Other Service Activities:
Facing a 12% decline in VAT contributions, this sector saw a decrease from N69.8 billion in 2022 to N61.4 billion in 2023. Challenges include competition from unregulated entities and the necessity for enhanced standardization and value addition in services.

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Transportation and Storage:
Reporting a 17% increase in VAT contributions, the sector’s revenue climbed from N62.0 billion in 2022 to N72.4 billion in 2023. Infrastructural deficits and regulatory inefficiencies hinder further growth and efficiency.

Wholesale and Retail Trade, Repair of Motor Vehicles and Motorcycles:
With a remarkable 104% increase, this sector’s VAT contributions more than doubled, reaching N138.1 billion in 2023 from N67.8 billion in 2022. Challenges include informal competition and market volatility that require strategic navigation for sustained growth.

Public Administration and Defence, Compulsory Social Security:
Experiencing a 41% increase in VAT contributions, this sector’s revenue rose from N128.7 billion in 2022 to N180.9 billion in 2023. Bureaucratic inefficiencies and governance issues necessitate reform for improved efficiency.

Financial and Insurance Activities:
The sector nearly doubled its VAT contributions with a 98% increase, reaching N215.8 billion in 2023 from N109.3 billion in 2022. Challenges include fintech integration, regulatory compliance, and cybersecurity risks.

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Mining and Quarrying:
VAT contributions from this sector surged by 64%, rising from N158.5 billion in 2022 to N260.0 billion in 2023. Environmental and regulatory challenges require careful management for sustainable development.

Information and Communication:
Showing a significant 53% increase in VAT payments, the sector’s revenue rose from N268.8 billion in 2022 to N412.3 billion in 2023. Challenges include digital infrastructure needs, regulatory clarity, and accelerating digital transformation.

Manufacturing:
Leading the VAT contributions with N578.4 billion in 2023, up from N477.4 billion in 2022, marking a 21% increase. Despite being the backbone of Nigeria’s industrialization, the sector faces challenges like high operating costs, infrastructural constraints, and global supply chain disruptions.

Efforts to streamline operations, invest in infrastructure, and address sector-specific challenges are crucial for sustaining growth and economic development across these key sectors in Nigeria.

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Massimo De Luca, Head of Cooperation and Delegation of the EU to Nigeria and ECOWAS, made this declaration at the 4th Session of the Steering Committee of the Support Programme for Fiscal Transition in West Africa (PAFT) in Abuja.

De Luca highlighted the lack of transparency in VAT administration in Nigeria, stating that businesses struggle to recoup the VAT they pay on purchases, making compliance challenging, especially for Small and Medium Enterprises (SMEs).

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He emphasized that the low standard VAT rate hinders revenue generation and called for a robust system to attract investment.

Mr. Andrew Onyenakwe, another speaker at the event, urged for the streamlining of taxes in Nigeria for ease of administration.

The EU also expressed concerns about unpredictable regulations and a lack of transparency in Nigeria, which discourage investors. They highlighted the need to combat tax evasion, including transfer pricing schemes that shift profits overseas to avoid taxation.

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