…Nigeria Does Not Need Many Taxes To Generate High Revenue—Oyedele
The Joint Tax Board on Monday held its 133rd meeting in Abuja with an agenda to harmonize and codify taxes at the national and sub-national levels so as to achieve a tax friendly environment in Nigeria.
The meeting was attended by the Chairman of the JTB who is also the Executive Chairman of the Federal Inland Revenue Service, Mr Muhammad Nami; the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms Mr Taiwo Oyedele; and representatives of the Internal Revenue Services of the 36 states and the Federal Capital Territory.
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For years, the Manufacturers Association of Nigeria (MAN) has been raising the alarm over the issue of multiple taxations in the country.
Many businesses in Nigeria are still overburdened with numerous demands from various tiers of government in form of taxes, levies, fees, and permits, among others.
In addition, companies in the sector are confronted daily with multiple regulations and excessive drive for revenue generation by government agencies.
But speaking at the JTB meeting, Oyedele said a sound fiscal policy and tax environment is critical for economic development, adding that Nigeria ranks very low on the global ease of paying taxes.
According to him, Nigeria’s tax to Gross Domestic Product ratio which is put at 10.8 per cent is much below the African average and one of the lowest in the world.
He added that the current low revenue has led to over-reliance on borrowing to finance public spending as debt service cost consumes a greater portion of revenue resulting in a vicious cycle of inadequate funding for socio-economic development.
Oyedele explained further that while some incremental progress has been made over the years, the outcomes have not been transformative enough to change the narrative.
He listed the key challenges of Nigeria’s tax system to include multiplicity of taxes and multiple revenue collection agencies; largely fragmented, rudimentary, and complex tax system which has added to business risk; low revenue due to low tax morale and high prevalence of tax evasion; and high cost of revenue administration and compliance.
Others are lack of effective policy coordination within and across tiers of government and poor accountability for the utilisation of taxpayers’ money.
Oyedele said where multiple taxes are levied on businesses, it leads to low tax morale and taxpayers’ apathy; low tax to GDP ratio; poor sovereign credit rating, discourages investments; serves as avenue for tax corruption and leads to complexities of doing business.
This, he added, depletes returns on investment, erodes business capital, and may trigger business collapse.
On what should be done to tackle the issue of multiple taxation, Oyedele called on the JTB to ensure clarity of taxing rights; integration of tax collection functions; harmonisation of revenue administration and simplified approach to tax compliance.
In his speech at the event, Nami said there is need to link revenue administration to eliminate the challenges of multiple taxation.
He said, “The intention or the goal is to reduce multiple taxes to encourage investment to raise adequate revenue, because the irony of everything is that the more of these taxes that we have, the less of the revenue that we generate.
“So, what we want to do is to reduce those number of taxes, block leakages in the tax system, build classroom for the teachers that is why we are here so that going forward, the local government Chairman, the state governors, President of the Federal Republic of Nigeria can have more money to build roads, critical infrastructure that will require we have more money to provide social services to our people.”