The Nigerian government says it is planning to increase the tax ratio to the Gross Domestic Product (GDP) to 15 percent from 8 percent as of 2022.
Zainab Ahmed, Nigeria’s minister of finance, budget and national planning, said this at the ongoing 25th annual conference of the Chartered Institute of Taxation of Nigeria (CITN) in Abuja.
Ahmed, represented by Basheer Abdulkadir, director, tax policy in the federal ministry of finance, budget and national planning, (technical services department), said there were a lot of levies and taxes that are collected at sub-national levels that have not been taken into account in calculating the tax to GDP ratio.
“As part of the integrated national financing framework, we’re looking at increasing the revenue to GDP ratio to 15 percent,” she said.
According to her, there is an independent study which has shown that the tax ratio to GDP has gone up to 10 percent even though the result has not been put in the public domain.
“But you know when you are calculating tax to GDP ratio, you will have to take all the taxes put for the federal and sub-national level. The seven percent that has always been tinkered is only the federal taxes.”
The minister said no nation can make meaningful progress without stability of its earnings, hence the need to prioritise means to generate more revenue for sustainable development. She noted that the Federal Government had overtime carried out extensive policy reforms such as the annual Finance Act which aims to improve the fiscal performance and also support
She said non-oil revenue was growing, noting that the Federal Inland Revenue Service (FIRS) for the first time crossed the 10-trillion naira mark in tax revenue collection in 2022.
She charged the tax community to proffer ways of improving taxes, including how new business models can be appropriately taxed. The minister said that options were being explored to widen the tax net to include businesses in the informal sector.
“Let me charge you to discuss our tax rules in an ever changing business model; we need to also retain our incentives and widen incentives to strike a balance between stimulating growth and generating revenue,” she said.
Clement Agba, minister of state, budget and national planning, addressing the conference, said government’s revenue has been challenged due to multiple factors as available resources are inadequate to address increasing responsibilities.
Agba, who was represented by Sam Ekweme, his special assistant, said concerted efforts were required to prioritise government expenditure with emphasis on resource mobilisation.
“The task of improving Nigeria’s tax revenue collection is urgent; every aspect of our national development depends on the national budget and the ability of the government to provide them depends on available revenue,” he said.
He commended the institute for its valuable services particularly in human capital development, enhancing taxation and supporting the country’s economic growth.
Muhammad Nami, the executive chairman, FIRS, said Nigeria operates a fragmented taxation and this limits the development of a robust tax system and affects the tax to GDP ratio growth.
“Harmonisation of tax administration systems and enhancing efficiency of tax compliance is the way to grow. There is a correlation between tax revenue generation and tax harmonisation,” Nami, who was represented by Muhammad Abubakar, his coordinating director, said.
Obomeghie Nana-Aisha, secretary, Joint Tax Board (JTB), said there was a need to deliberate on how to transform potentials in the country and properly position the country to take advantage of emerging opportunities.
“And to also ensure that immediate potentials are addressed for sustainable and inclusive development,” she said.