Nigeria’s Economic Diversification Fully On Course – Nami
BY COBHAM NSA – Chairman of the Federal Inland Revenue Service (FIRS), Muhammad Nami, said though still work-in-progress, efforts at diversifying the Nigerian economy are fully on course.
According to Nami; “To address the issue of Nigeria not diversifying its economy, from a tax perspective, you will discover that we are actually diversifying the economy.”
Speaking at the ‘Public Presentation And Breakdown Of The Highlights Of The 2022 Appropriation Bill’, Nami said over 4.2 trillion Naira has been collected so far in 2021 in revenue, with about 3.3 trillion Naira, that is over 77 percent of the total collection from the non-oil sector.
“The total collection we have up to 31 September, which we have not fully reconciled with the CBN and the Nigerian Customs is about 4.2 trillion Naira, and from this amount, oil-related taxes accounted for only 22 percent which is 950 Billion Naira only, while the non-oil taxes we have generated within that period is 3.3 trillion Naira.”
However, Nami admitted that though the potentials of the country’s non-oil revenues are being harnessed, it was still inadequate, adding; “To discuss the taxes that are being paid in the country and to say whether they are adequate or not, I want to believe one, they are not adequate.”
“People are not willing to pay even when they are appointed as agents of collection; whatever they have collected on behalf of the government they find it difficult to remit. When you compare Nigeria as an oil-producing country to a small country like Saudi Arabia, we are still not there.
“We assume that we are a rich country, I don’t think that is correct. We only have the potential to be rich, because we have a very huge population of about 200 million. Saudi Arabia, with a population of about 35 million people, has an oil firm, ARAMCO that raked in 49 billion dollars in profit in 2020.
“At our official rate, that is roughly about 20 Trillion Naira in profit: more than the total budget sum for 2022 that was submitted by President Muhammadu Buhari. Despite the above statistics, Saudi Arabia still earns revenue from several other sources including religious tourism and Value Added Tax which is as high as 15 percent as against Nigeria’s 7.5 percent”, Nami said.
The FIRS Chairman said the best way to fund budgets globally is through payment of taxes by citizens, particularly personal income tax which is a direct tax as against indirect taxes, noting that personal income taxes in other countries account for over 50 percent of the funds available to their respective governments for funding expenditure.
According to him; “Our total taxpayers today is in the region of about 41 million people and the total personal income tax paid last year was less than N1 trillion by 40 million people.
“If you also compare that with our own brother South Africa where they have a total population of about 60 million people, with just 4 million taxpayers, the total personal income tax paid in South Africa last year is about N13 trillion. You can now see that these things are not adding up.
“The number of billionaires in Lagos alone is more than the number of billionaires in the whole of South Africa but yet what Lagos State generated as Personal Income Tax was just less than N400 billion in 2020.”
“So if we don’t pay these taxes, there is no way the government will be able to provide the social amenities required, the critical infrastructure required for the wellbeing of the country,” he further stated.
The Minister of Finance, Budget, and National Planning, Zainab Shamsuna Ahmed, had while responding to a question at the Public Presentation ceremony of the 2022 budget estimates, said there was a social contract between taxpayers and authorities.
For her, government revenue generated was being applied judiciously to funding its expenditure at all three tiers of government, even as she urged citizens to always pay their taxes.
The Minister noted that it is when citizens pay their taxes conscientiously that they become stakeholders who can demand accountability from the government.
President Muhammadu Buhari had during his 2022 Budget presentation speech to the National Assembly acknowledged that; “On a positive note, we surpassed the non-oil taxes target by eleven (11) percent in aggregate. The sustained improvement in non-oil taxes indicates that some of our revenue reforms are yielding positive results.
“We expect further improvement in revenue collections later in the year as more corporate entities file their tax returns and we accelerate the implementation of our revenue reforms.”