Clement Adeyi, Osogbo A governorship aspirant on the platform of the All Progressives Congress (APC), Kunle Adegoke, has said that his four-point agenda can rebuild the state’s economy. Adegoke who is one of the 17 aspirants screened and cleared by the National Working Committee of the party to participate in the direct primary that will…
The Federal Government’s effort to expand the nation’s tax base is encouraging. According to the Minister of Finance, Mrs. Kemi Adeosun, the government has aggressively grown its taxpayers’ base to 19 million. This is 5 million more than what it was two years ago. The 19 million is from the 65 million “economically active people,” who are not tax compliant yet.
The minister stated this during the reception of the World Bank delegation that visited the country recently on a fact-finding mission. The new tax base is the outcome of the ongoing drive by the Federal Inland Revenue Service (FIRS) to increase the nation’s tax revenue. The International Monetary Fund (IMF) had earlier advised the government to broaden its revenue base in order to finance growth-enhancing infrastructure and social programmes.
The IMF Director for African Development, Mr. Abebe Aemro Selassie, cautioned against the present over-reliance on oil revenue. He observed that available statistics show that critical sectors for economic growth such as education, power, health, road and social infrastructure are in serious deficit. The global financial lender recommended property tax as a veritable revenue source that the government should explore, in addition to embracing a single foreign exchange rate regime.
While a unified foreign exchange window may not be of immediate benefit to diverse groups that need foreign exchange, the good news is that the government’s revised national tax policy is yielding the desired results.
The addition of five million taxpayers into the tax net will boost the nation’s revenue. It also means that the Voluntary Income Declaration Scheme (VAIDS) has achieved its main objective. As at December 2017, only 943 Nigerians paid self-assessed taxes of less than N1million.
Currently, Nigeria has one of the world’s lowest tax ratios to Gross Domestic Product (GDP) of six per cent. Nigeria is ranked 124 out of the 138 countries on World Economic Forum’s Global Competitiveness Index. This has made it expedient for Nigeria to sit up, and not be complacent on account of the rising oil prices in the international market. Since the economy is vulnerable to the fluctuations in the oil market, increasing the tax base, which will create jobs, should be given urgent attention.
The government’s commitment to tracking tax defaulters through the Common Reporting Standards (CRS) should be further strengthened. The system can be used to track the ‘super-rich’ tax evaders. It is laudable that the government has set aside Thursday as ‘Tax Day’, to create awareness on the importance of paying tax.
The government’s effort to close all loopholes in the nation’s tax system, through FIRS, should be sustained. Last year, the agency reportedly brought 700,000 tax evaders into the tax net, with about N363billion tax revenue. In spite of this, our national tax revenue has not met the requirements to address the deficits in the key sectors that the IMF alluded to. Though Internally Generated Revenue (IGR), Company Income Tax (CIT) and Value Added Tax (VAT) have improved remarkably, they are still far short of the target.
The current effort to widen the tax net for increased revenue generation must go together with improving the ease of doing business. It is sad that the government is yet to deliver on its promise to improve the ease of doing business, as investors and Small and Medium Enterprises (SMEs) complain of many disincentives to business operations. It is not hidden that incorporating companies take longer time than necessary. Power supply remains a conundrum despite huge investment in the sector. Nigeria still generates less than 4,000mw as against its target of 10,000mw annually.
While paying tax is a necessity, Nigerians are worried that they do not see its impact on the provision of social infrastructure such as good roads, efficient healthcare system, stable electricity supply and others.
Government at all levels should let the people see what they are doing with tax revenue. That will make the expansion of the tax base worthwhile. Government should avoid imposing multiple taxations and tariffs that many organisations complained about. State governments should stop using multiple taxes to shore up their IGR. Funds realised from taxes must be properly utilised. That is the best way to encourage individuals and corporate organisations to voluntarily pay their taxes.