• Thursday, May 30, 2024
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BusinessDay

Government targets N78bn additional revenue with new tax effort

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The Federal Government is targeting to generate at least an annual tax turnover of $500 million (N78 billion) with a new tax strategy that would help it capture more people into the tax net and particularly improve its non oil tax collection.

The approach would basically focus on blocking loopholes and encouraging more people to embrace tax compliance.

Announcing this in Abuja on Monday during a telephone conference call, Ngozi Okonjo-Iweala, coordinating minister for the economy and minister of finance, said this effort would be launched, hopefully, June 1.

The conference call was organised by the Standard Chartered Bank and anchored from London by Razia Khan an economic analyst and regional head of economics, Africa, at the Standard Chartered Bank.

Up to a hundred and twelve economic analysts tuned in to the conference, including a few Nigerian journalists who participated.

Responding to questions from Khan, the coordinating minister explained that the state of emergency declared in three Northern states was the best for the country and assured investors that Nigeria’s economic fundamentals remain strong.

She also informed that the government is making frantic efforts to diversify the economy from oil, especially in the areas of taxes, agriculture, housing etc.

BusinessDay had exclusively reported that the new tax approach is an outcome of a thorough diagnosis of the Nigerian tax system jointly conducted by the Federal Inland Revenue Service (FIRS) and McKinsey and Company, a global management consulting firm.

With the diagnosis, government discovered that about 75 percent of “registered” firms in Nigeria were not in the tax system. It was also observed that about 65 percent of registered tax payers have not filed their tax returns in the past 2 years.

The main culprits were intermediate group of medium-sized professional service providers, contractors, and landlords. This non-compliant group falls in the grey area between the informal sector and large companies. For instance, it is estimated that tax leakages due to unpaid real estate rentals in Nigeria amounted to about US$250 million per annum.

Okonjo-Iweala had told BusinessDay that these are some of the anomalies that the coming strategy intends to address as she believed that so much success would be recorded focusing on this particular group.

During the conference call, Okonjo-Iweala assured the investing public that Nigeria is safe and its economic fundamentals remain strong, dousing fears of possible negative impact from the recently announced state of emergency in Borno, Adamawa and Yobe states.

She told the listeners that the state of emergency is a decisive move by the president and would be positive for the country and would help economic and social stability.

“The emergency rule is the best for the country and is a positive development for our economy. First of all, it is only three out of thirty six states that have been affected by the emergency rule and is expected to last a short time. The laws say six months, but it is expected that within the next one to two months, we should have a positive outcome and the president would do whatever it takes to ensure security of lives and property so that economic activity can take place”, the minister stated.