Punishes The Poor, 250% Tax Hike… 7 Things To Know About Proposed National Housing Act

Aanuoluwapo is a 23-year-old graduate with a higher national diploma with an income of N30,000. The goal is to save up enough to get a pos...

Aanuoluwapo is a 23-year-old graduate with a higher national diploma with an income of N30,000.

The goal is to save up enough to get a postgraduate diploma so as to bargain for a better salary at her company or a different entity.

Upon resumption at her workplace, her boss said she has to pay tax and pension. Although that would reduce her salary, she is grateful that she does not have to pay more than one percent as tax and the 7.5% she has to contribute for pension is her investment for the future.
Suddenly, she receives news that there will be yet another deduction from her salary; the National Housing Fund deduction and this is not negotiable.

For a lot of Nigerians like Aanuoluwapo, who is around the minimum wage band, the news of a compulsory deduction apart from tax and pension can be demoralising.

What Aanuoluwapo’s deduction will be after NHF deduction

The new national housing bill was recently passed by the national assembly. The bill, which is now awaiting presidential assent amends a number of provisions contained in the 1992 NHF act.

These amendments include:

Implications

For people earning income around the minimum wage band, the NHF contribution is 250% higher than their PAYE.

This might result in increased cement prices thereby increasing the cost of construction
The remittance channels are unclear thus worsening Nigeria’s position on the ease of paying tax index

Cost of borrowing will increase as banks will have to invest some of their profit in the fund
The eventual refund at a 2% interest rate does not make provisions for the time value of money
The requirement for pension fund administrators to invest in the fund will result in reduced returns for pensioners.

Taiwo Oyedele, a tax partner at PwC Nigeria, described the bill as regressive.

“This bill is punishing the poorest people the most and is against the natural principle of tax justice,” he told TheCable.




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