• Saturday, July 13, 2024
businessday logo

BusinessDay

CITN foresees narrow revenue flows from luxury tax introduction

businessday-icon
The Chartered Institute of Taxation of Nigeria (CITN) on Thursday said that the introduction of luxury tax in Nigeria will not make much impact on the tax revenue of the Federal Inland Revenue Service (FIRS). Considering developments in the crude oil market which saw oil price decline by over 50%, the Federal Government said it targets revenue of about N480 billion within the next three years, to be driven majorly by the implementation of tax on luxury goods.
According to Mark Anthony Dike, president/chairman of council, CITN, assuming FIRS targets N6 trillion, luxury tax would contribute only 0.38%.
“Another issue of concern is the question as to whether this is indeed a tax or levy as the necessary legal instrument to back it up has not been submitted to the National Assembly for passage,” Dike said. He disclosed this at the institute’s quarterly press conference/media parley aimed at addressing all burning national and international issues on taxation and the economy. “To accommodate luxury tax, there should be a holistic amendment of Value Added Tax (VAT) law. Given that income tax rate is 30% and VAT is 5%, there is a revenue loss,” Dike said.
Speaking further at the briefing which held at CITN’s new head office, The Tax Professionals’ House, CITN president said the institute also welcomes reports that the “government is thinking in broader terms in this regard by focusing on the non-oil sector. We reiterate our call on government to consider the current non-oil sector drivers such as mining and quarrying, trade, information and communication, telecommunications and information services and real estate sectors which constitute 14.50%; 17.02%; 10.94%; 8.69% and 8.02%, respectively, of Gross Domestic Product (GDP) as at 2013 for increased revenue.”
On waivers and concessions, CITN called on government to consider a more transparent and responsible waiver regime where the beneficiaries are tracked for utilisation and performance with respect to the impact of the waiver and concessions. The institute noted with dismay the oil price benchmark used for the budget and joined in the call for the benchmark to be scaled down to not more than $55 “due to the economic realities of the global crude oil market even if government is reasonably certain of better prices during the fiscal year.”