Tax Reforms: Presidential Committee Canvasses Robust Methods To Grow Revenue, Economy
- Insists on 1% cost of revenue collection
- Says only 10% of rich Nigerians paying tax
- Proposes daily sharing of revenue to FG, States, LGAs
- Wants NRS to replace FIRS
BY COBHAM NSA – The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oyedele, says engaging reforms and effective implementation of legislation in the tax sector will give Nigeria the needed boost in revenue generation and economic growth.
Oyedele said these are part of the Committee’s far-reaching proposals to enhance government’s revenue profile and sustain economic development in the country.
Speaking at a public consultation workshop for journalists and public analysts in Abuja on Monday, Oyedele said they are working to ensure fair taxation, responsible borrowing and sustainable spending, with further recommendations aimed at exempting poor people from taxation in the country and focusing more on efficient tax administration and collection from the rich of society
The Chairman, who frowned at a situation where less than 10 percent of rich Nigerians pay their taxes currently, also described as “totally unacceptable” that the current cost of revenue collection in the country, ranges between four and 35 per cent.
He said the global best practice cost of revenue collection is around one per cent, citing the South African experience where the highest revenue is collected in Sub-Sahara Africa, with less than one per cent spent on achieving such an impressive result.
According to him, given the Committee’s mandate, its primary goal is to reduce multiplicity of taxes and other abuses in the fiscal system to the barest minimum, maintaining that Nigeria must create a more robust fiscal policy-supportive environment for businesses to thrive while also reducing the huge burden on tax payers and lifting millions of Nigerians out of poverty.
While applauding the recently introduced Angolan model where those earning a monthly income of less than the equivalent of N180,000 are exempted from tax payment, Oyedele argued that; “No country has ever earned prosperity by taxing poverty. Angola recently announced a tax reform. If you earn less than the equivalent of N180, 000 monthly, you are tax exempt. I don’t mean $180,000. I mean equivalent of N180,000.
“Outcomes expected from our reform efforts include to collect taxes better. We will eliminate informal taxes and harmonise tax administration.”
The Committee Chairman also disapprove of the huge tax burden placed on citizens across the country, saying; “When we did our analysis, there are over 60 taxes nationwide. Unofficially, we have more than 200 taxes. A truck driver told us that moving goods from one point to the other across the country, he budgets N450,000 for all kinds of taxes and illegal collections.
“We have to stop the insanity around taxes in this country. This is chaotic. We must do away with nuisance taxes and focus on high-yielding taxes” in line with global trends if the country must move forward and enjoy economic prosperity.
Offering further insight to the Committee’s four pillars of recommendations, he explained that these are based on education, poverty, health and electricity following the work done over nine months since its inauguration.
For the Tax expert, prioritizing revenue in these key sectors would ultimately reduce Nigeria’s poverty rate and position the economy on the path of sustainable growth in the years ahead, adding; “The basic principle in tax administration is that you cannot be taxing poverty and achieve economic growth. Taxes are to be imposed or used to create prosperity.”
Other proposals by the Committee include replacing the Federal Inland Revenue Service (FIRS) with Nigeria Revenue Service (NRS) since its “revenue collection mandate encompasses revenues at national and sub-national levels and not necessarily the Federal Government’s revenue alone.”
Oyedele also expressed the Committee’s opposition to the current practice where revenues accruals are distributed monthly by the three tiers of government given the attendant negative implications for the inflation rate in the country.
Alternatively, the Committee is proposing daily distribution of accruing revenues to moderate the rising price level in the economy.
Oyedele said the Committee’s resolve at ensuring inputs of all critical stakeholders are sourced to aid the ongoing fiscal reformative drive nationwide, is evident in its robust engagement with every segment of society including the Organised Private Sector (OPS), Farmers’ associations, Trader groups, Manufacturers, Players in the Maritime industry, the Central Bank of Nigeria (CBN), the fiscal authorities at both national and sub-national levels as well as the National Assembly (NASS), among others.
He also tasked the media to properly and accurately enlighten the Nigerian public, particularly the tax payers, on the Committee’s mandate and current reform measures being proposed to keep them well-informed and elicit their support in creating a more conducive environment for businesses to thrive while enhancing the citizen’s overall welfare.
The Chairman said despite being an advisory body, the Committee has extracted government’s commitment on focused consideration and implementation of its proposals, emphasizing the need for governments to embrace productive fiscal policy option to address existing as well as emerging challenges of effective tax administration in the country,
On challenges faced by businesses due to the Foreign Exchange (FX) market volatility which causes frequent changes in the import duty rate, Oyedele said market stability would allow adequate planning by businesses, just as he lamented that Nigeria’s revenue losses associated with tax administration inefficiencies and high rates of taxes remain among the highest globally.
