The Federal Inland Revenue Service (FIRS) has advised that Nigeria must harmonize its taxes to stop revenue leakage and optimize tax revenue collection.
Muhammad Nami, Executive Chairman, FIRS made this call at the launch of the Public Finance Database by the Nigeria Governors’ Forum held recently in Abuja, where he posited that the country needs to make a bold paradigm shift in its tax practice.
“Recently, there has been a clamour for a holistic review of our tax system that if Nigeria must achieve its tax revenue potentials as the fulcrum of economic development, a harmonisation of our tax system must be undertaken,” he said.
The FIRS chairman said during the 2nd National Tax Dialogue themed ‘tax harmonisation for enhanced revenue generation,’ there was a consensus that Nigeria needs a transition to a unified tax administration as practised globally by most of the efficient and effective tax jurisdictions that have achieved optimum tax revenue collection.
“If Nigeria must be less dependent on external borrowing and buffer from the volatility and dwindling oil revenue, there should be a paradigm shift; the country should be willing to make those bold and hard but beneficial tax reforms and there is no better time than now, if we must avert the looming debt crisis,” he said.
He also gave the assurance that the gains from a harmonised tax system outweigh possible fears and scepticism.
Nami said that the low compliance tax rate in most developing countries was as a result of the failure of the social contract between the taxpayers and the government, noting that those in political leadership in the country had a duty to promote a tax-paying culture by relating projects and infrastructural developments executed by them to taxes paid by taxpayers.
“Taxpayers need to see what has been done with their money to be encouraged to continue to pay their obligations under the Social Contract they have with the government,” Nami said.
The chairman said that the government at all levels are effectively optimizing taxes remitted but the manner with which the projects are reported does not give room for appreciation.
He urged political office holders to promote the tax-paying culture by relating projects and infrastructural developments executed by them to tax.