The Federal Government of Nigeria through the ministry of Finance, Budget and National Planning on Tuesday called for private inputs and collaboration to ensure the success of the Finance Bill recently approved by the Senate, while promising that it would be an annual exercise going forward.
This was brought to the noticed of the public through Zainab Ahmed, the minister of finance, who spoke at the PwC executive session on finance bill and tax strategy held on Tuesday.
According to her, making the finance bill an annual exercise would create a platform for sustainable tax practice that would be beneficial to all stakeholders involved and will also put a stop to static laws governing the tax and finance system of the country.
“Finance bill will henceforth be an annual exercise with a window to consider feedback from on-going dialogue with key stakeholders, including the private sector
“I encourage everyone to engage in the dialogue process to provide constructive feedback that will enable us to build a tax regime that stabilizes the economy, promotes equity, drives economic growth and protects our vulnerable citizens and businesses,” she said.
The finance bill which was submitted along with the 2020 budget proposals and 2020 appropriation bill mid-October aims to achieve five major objectives: to improve the business environment, increase revenue and create a sustainable path to a growing economy.
The bill seeks to promote Fiscal Equity by mitigating instances of regressive taxation, reforming domestic tax laws to align with global best practices, introducing tax incentives for investments in infrastructure and capital markets, supporting micro, small & medium-sized businesses (MSMES) in line with the ease of doing business reforms and raising revenues for government to fund the 2020 budget.
Speaking on the economy and revenue generation, she said the Nigerian economy is bedevilled by structural challenges which limit its ability to sustain economic growth, create more jobs and achieve significant poverty reduction.
According to her, the country’s overdependence on oil for its economic activities, fiscal revenues and foreign exchange earnings serves as the major cause of the country’s problems, consequentially; she says Nigeria needs a lot of resources especially from its Domestic Revenue Mobilization (DRM) in order to actualize the economic recovery growth plan as well as its other development plans.
Speaking on tax, she said the Nigerian tax system was built on a progressive tax scheme, but noted however some of the laws have become regressive overtime. According to her, “we have very low tax collection efficiency, archaic tax laws that are not evolving at a commensurate pace with businesses, leakages in our revenue generation, low tax compliance rates, high level of evasion and poor tax morale,” she added.
She called for well-coordinated and multi-faceted reforms in order to fix the challenges and achieve the aim to grow the country’s tax contribution of 6 percent to the GDP ratio.
Taiwo Oyedele, policy partner and West Africa tax leader for PwC, while presenting an overview of the finance bill, said there were various issues around taxes in Nigeria. “Nigeria has a complex tax system and a revenue challenge ranging from fiscal federalism, multiple taxation, multiple audit, aggressive targets, archaic tax laws, tax policy issues among many others. However, Nigerians are willing to pay taxes for improved services.”
He declared that despite having over 60 types of taxes, the government was just able to generate less than 10 percent in revenue from these taxes.
David Ibidapo
