large number of food items, medications, educational materials and other items are to be exempted from Value Added Tax (VAT), it was learnt yesterday.

The Federal Government plans to streamline taxes and improve the business environment.

The Presidential Committee on Fiscal Policy and Tax Reforms, led by Taiwo Oyedele, at a policy exposure and impact assessment session, said the series of proposals were aimed at streamlining Nigerias tax system, reducing burdens on businesses and consumers, and ultimately stimulating economic growth.

Oyedele outlined the committees recommendations which included a significant expansion of VAT exemptions and a potential overhaul of the current consumption tax structure.

He said the committee discussed other proposals to reduce companies income tax rate, increase exemption threshold for personal income tax while a central focus of the proposals is a shift toward a more socially sensitive VAT regime.

We propose to remove Value Added Tax (VAT) on an expanded list of basic food, educational and healthcare items to protect the poor, Oyedele said.

He noted that the move would directly reduce the cost of essential goods and services for Nigerians most in need.

According to him, beyond consumer-focused reforms, the committee is advocating for measures to ease the tax burden on businesses, including a proposal involving full input VAT credit for businesses, which would allow businesses to reclaim the VAT they pay on goods and services used in their operations, leading to lower overall costs and improved cash flow.

The committee also recommended to the government to harmonise all consumption taxes into one (VAT only) streamlining the tax landscape for businesses. This means that businesses will only have to deal with VAT.Additionally, the committee has proposed adjusting the revenue sharing formula in favour of states to address multiplicity of taxes. This would incentivize states to rely less on many smaller consumption taxes and focus on VAT collection.

Further proposals target boosting non-oil exports. The committee has recommended the removal of VAT on export of service and intellectual property.This would make Nigerian exports more competitive in the global marketplace.

Recognizing the challenges faced by small businesses, the committee also proposedincrease the threshold for VAT exemption for small businesses and toenhance the VAT refund process to reduce the strain on working capital of businesses.

The committee acknowledged the need to balance tax relief with revenue generation.

Oyedele however noted that these proposals do not represent the position of the government but our committees proposals, which we are still undergoing discussions with the private sector for their input.

To address potential revenue shortfalls, the committee suggested the introduction of VAT fiscalisation and electronic invoicing to curb evasion.This would create a more transparent system and ensure businesses are paying their fair share.Additionally, the committee proposed aconsequential upward adjustment to the VAT rate on items not exempted to maintain overall government revenue. (The Nation)