…Taps 30% of Tetfund income to fund NELFUND
…To deploy tax tools to drive jobs, exports
The federal government is making plans to bring more eligible individuals and entities into the tax net to increase its revenues and meet obligations to the citizens.
It aims to actualise this objective through a project named, “Tax Identification Consolidation and Collaboration (TICC).”
The project will widen the tax net and the tax base in line with the newly proposed Economic Stabilisation Bills (ESB) set to be sent to the National Assembly.
The initiative is part of the 15 bills set for amendment as approved by the Federal Executive Council (FEC) on Monday, Taiwo Oyedele, chairman of the Presidential Fiscal Policy and Tax Reforms Committee, said on his X handle.
“Part of the plan is the introduction of ‘Tax Identification Consolidation and Collaboration (TICC)’ initiative to expand the tax base, widen the tax net, and create a level playing field for businesses,” he noted.
Collaboration with states
The government is also planning to collaborate with state governments to suspend certain taxes on small businesses and vulnerable population to give them a breath of fresh air.
The federal government intends to woo states to eliminate taxes such as road haulage levies and other charges on transportation of goods; business premises registration; animal trade and produce sales tax; bicycle, truck, canoe, wheelbarrow, and cart fees; shops, kiosks and market taxes and levies.
“The ESB seeks to amend about 15 different tax, fiscal, and establishment laws to facilitate economic stability and set the country on the path for sustained inclusive growth,” Oyedele said.
Other objectives contained in the proposed bills include changes designed to achieve inflation reduction and price stability.
The proposed bills are also expected to promote fiscal discipline and consolidation, enhance job creation and poverty alleviation, as well as serve as catalyst for export promotion and diversification.
The key changes to be made to the various laws include amendments to the income tax laws to facilitate employment opportunities for Nigerians in Nigeria within the global value chain, including the digital economy.
Read also: Nigeria eyes wider tax net with Identification Consolidation and Collaboration in new bill
FG eyes TETFUND’s 30% revenue
On the amendment to the Tertiary Education Trust Fund Act, Bayo Onanuga, special adviser to President Bola Tinubu on information and strategy, told journalists in Abuja on Wednesday that the government has successfully pushed an amendment to the Tertiary Education Trust Fund (TETFUND) Act, which provides for the deduction of 30 percent of revenue accruable to the agency to fund the newly established National Education Loan Fund (NELFUND).
“There is an amendment to the TETFUND 2011 Act, which now says it shall fund the disbursement of NELFUND. This means that TETFUND, before it disburses the amount in its fund, shall set aside an initial one-third of the amount to be transferred to the Nigeria Education Loan Fund, This is 30 percent of whatever TETFUND gets from the federation account. The amount will now be passed on to a readymade source of fund to NELFUND,” he said.
Onanuga confirmed an amendment of the Nigerian Maritime Administration and Safety Agency (NIMASA) Act and that of the Nigeria Ports Authority (NPA) such that all their fees, charges, levies, fines and other monetary accruals will now be paid in naira at the applicable exchange rate.
“You will recall that, hitherto, those agencies were charging their fees in dollars. So, those agencies can now collect naira.
“This affirms that the government wants to place emphasis on our national currency instead of dollarising our economy.”
Nigeria’s poor fiscal position
Nigeria wants to generate more revenue not just by raising taxes but by bringing more persons and entities into the net.
The nation’s revenue to the gross domestic product (GDP) stood at 9.4 percent in 2023, but it was a decline from 10.9 percent in 2021, according to the International Monetary Fund (IMF).
South Africa’s revenue to GDP stood at 25.1 percent in 2023, according to South Africa Revenue Service (SARS).
Ghana’s tax to GDP is estimated at 14 percent. Rwanda is currently at 24 percent, while Kenya’s is 14.3 percent, says the World Bank.
Nigeria’s total public debt stood at N121. 67 trillion in the first quarter of 2024, from N97. 34 trillion in the fourth quarter (Q4) of 2023.
Read also: Ministers jittery as Tinubu hints on cabinet reshuffle
Bill Gates, co-chair of Bill and Melinda Gates Foundation, in his recent visit to Nigeria said, “Nigeria’s economy has stagnated. Earlier this year, your debt exceeded 50 percent of your GDP for the first time since 2001.”
“And while your revenue-to-GDP ratio has grown, it’s still lower than what it was 15 years ago. The result is that Nigeria spends less per-capita on its people than other African countries with a fraction of your wealth.”
He further said that the Nigerian government must demonstrate that it is properly utilising tax revenues before propping the citizens to pay.
“Taxes are never popular. That’s true in America too. But they’re part of a social compact. People are more likely to pay them when they see the government spending that money to give Nigerians a better life.”
The Nigerian Economic Society (NES) recently warned that Nigeria’s slowing revenue generation may pose significant challenges to its economic growth and social wellbeing of its citizens.
This is contained in a report presented by Adeola Adenikinju, president of NES, at the 65th annual conference of the economic group in Abuja.
Adenikinju noted that with the level of revenues generated in the country, Nigeria may find itself among countries with lowest revenue collection, raising concerns over its economic sustainability.
“Nigeria’s fiscal performance benefited from the foreign exchange liberalisation in 2023, but the country still suffers a revenue problem and could remain among the bottom 10 countries with the lowest revenue in the medium-term,” NES president warned.
