The new tax law will be expected to protect the vulnerable poor and small businesses in the country, says Taiwo Oyedele, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms.
Oyedele, who appeared on Arise TV’s The Morning Show on Thursday, revealed that his committee was working on an assignment that will help the Federal Government increase its revenue through taxes without overburdening more than 144 million Nigerians living in poverty.
“We are hoping that we will even increase the exemption to protect the vulnerable people and small businesses,” Oyedele added.
The chairman of the committee admitted that what was prevalent in the country was an unhealthy tax burden that was overbearing on the already stressed Nigerian poor populace and struggling small businesses that, by his account, needed support to survive.
He said, “The burden of tax compliance and funding government in Nigeria has been disproportionately on the poorest people, which is not right.
“When we did VATE (Voluntary Asset and Income Declaration Scheme), the vice president who was acting as president at the time said on record that 96 percent of income collected through personal income tax was POIA. Rich people don’t pay POIA.”
Earlier in the interview, Oyedele, who worked as a consultant for PwC for the past 20 years, lambasted the 10.86 percent tax-to-GDP ratio as reported for 2021, promising that his committee will work on how to help the Federal Government increase this number so that it meets its target of 18 percent within the next three years.
He said, “As for the end of 2021, because the number for 2022 is not out yet, the tax-to-GDP ratio was 10.86 percent for Nigeria. If you look at Africa, the average tax-to-GDP ratio is 16 percent; if you take Nigeria out of Africa and calculate that average, it is 18 percent.
“So the question is, why can’t Nigeria just get to Africa’s average—that is where we got the 18 percent from. Now we are not hoping to get to 18 percent in 12 months; that will be unrealistic.
“So why the work of my committee will be divided into three milestones over a period of one year. The result will continue. So the 18 percent target is in the next three years.”
In trying to address the gap in tax collection as per the revenue needed, Oyedele referenced levies and taxes collected by Local Governments in the country. He advised that instead of collecting 21 levies and taxes, they could instead collect one tax, which in this case is a property tax.
He added that the collection of property tax could earn them 10 times the amount they collect currently.
“So if we repeal 50 different taxes—by the way, the local government has 21 levies and taxes assigned to them, yet they are poor.
“Maybe they need only one—property tax—and they will collect 10 times what they are collecting today.”