Nigeria’s Multiple, Overlapping Tax System Worries Buhari
President Muhammadu Buhari has faulted the nation’s current multiple and overlapping tax system saying it’s inefficient and creates uncertainty and instability.
He therefore canvassed for efficient tax administration to boost the nation’s revenue base.
Speaking yesterday while declaring open the second annual National Tax Dialogue Week in Abuja, the president said he was worried about the current tax system in the country, characterized by fragmented administration, multiple and sometimes, overlapping taxes.
According to him: “Multiplicity of tax administration is as undesirable as multiplicity of taxes; it creates uncertainty and instability; and above all, it is inefficient.”
He, however, expressed his administration’s commitment to an efficient tax system in order to improve tax revenue in the country.
He said: “In most tax-efficient nations, tax administrative processes and practices are harmonized within a single system.
“One key deliverable of this year’s tax dialogue is to promote synergy in tax administration among the different tiers of government.
“Harmonizing ease of taxpayer identification across the country is a good start; but we must do more to promote of doing business (including ease of tax compliance) in Nigeria.
“On our part, we have started by clarifying in the 2021 Finance Act that FIRS is the sole authority to administer tax for the federal government.
“This clarification became necessary in order to avoid taxpayers being burdened with multiple tax compliance obligations towards different agencies of the same government”, the president said at the dialogue with the theme: “Tax Harmonization for Enhanced Revenue Generation.”
In the face of dwindling revenues from commodities, Buhari told participants that there was an urgent need to maximize domestic revenue within the extant tax policy and laws.
He, therefore, proposed improved tax revenue for the country which would not necessarily impose new tax rates on Nigerians.
“We all know that good intentions are not enough as they simply cannot pay for infrastructure, security or social amenities. We must therefore improve tax revenue without necessarily raising new taxes.
“Revenue from commodities, including crude oil, are too volatile and unreliable. Therefore, I pledge government’s support for any viable initiative for improving tax revenue that should emanate from this dialogue,” he said.
On Nigeria’s tax-to-GDP ratio, the president declared that the country also needs to do more in securing a buoyant domestic revenue base of the country that bequeaths an enduring economic foundation, political stability and social harmony to the next generation.
“According to the Organization of Economic Cooperation and Development (OECD), in its Revenue Statistics in Africa 2021, the average ratio of Tax-to-GDP of 30 selected African countries in 2019 was 16.6 per cent while Nigeria recorded a mere six per cent .
“It is obvious that much needs to be done in the area of tax revenue mobilization. ‘It is my expectation that the discussions at this 2022 National Tax Dialogue will be focused on what we must do to maximize legitimate revenue collection and massively improve the tax -to-GDP ratio.”
On the importance of the tax dialogue, which was instituted by the Minister of Finance, Budget and National Planning, and the Executive Chairman, Federal Inland Revenue Service (FIRS), Buhari noted that the first edition in 2021, was productive and integral in influencing tax policy, as well as legislative and administrative changes that were introduced last year.
He added that the most important testament to the success of the first edition was the fact that the FIRS achieved 100 per cent of its collection target in 2021 and surpassed N6 trillion revenue threshold for the very first time.
Congratulating the FIRS on the achievement, the president assured Nigerians that the present administration would continue to maintain prudent management of the collective resources.
Earlier in her remarks, the Minister of Finance, Budget and National Planning, Zainab Ahmed, said the dialogue was designed to engage stakeholders in the Nigerian tax-space in meaningful discourse so as to glean information, ideas and experience in the aid of policy formulation and improved tax environment.
According to her, he main tax revenue objectives of the federal government included developing an economy that does not lean too heavily on resource wealth.
She explained that Nigeria’s economic history provides enough facts that resource wealth alone cannot lead to sustainable development, self-sufficiency and sustainable.
According to her: “The other tax revenue objectives are:
“To institutionalize a healthy tax culture among Nigerians. The right attitude towards taxation will enable every Nigerian to become a co-guardian of the tax system and the commonwealth.
“To create a participatory system of taxation whereby the taxpayers and other stakeholders understand and accept that they have equal stakes in the tax system.”
Also speaking, the Chairman of FIRS, Muhammad Nami, thanked the president for his directive to government agencies to enable FIRS connect to their ICT systems; noting that this singular pronouncement softened the grounds for the Service to roll-out its system for seamless acquisition of data.
He said: “We are confident that by the time all the agencies achieve 100 per cent compliance with the president’s directive, Nigeria shall be the envy of other countries for tax compliance and domestic tax revenue mobilisation.”
On the remittances of the FIRS to the Federation Account, Nami announced that statistics from March 2022 Federation Account Allocation Committee (FAAC) meeting show that out of a total revenue of N803.072 billion from all revenue agencies, tax revenue contributed by FIRS was N513 .522 billion (63.94%) while non-tax revenue from all other agencies amounted to N289.55 billion (36.06%).
He noted that the average tax or FIRS contribution to FAAC in 2021 was 59.45%.
“I mentioned in my welcome address to the 2021 edition of the Tax Dialogue that the world had begun a tax race of which Nigeria must be a winner.
“The revenue profile of the country in 2021 has clearly shown that our continued survival as a nation depends on tax revenue.
“This trend is set to continue for some time to come. As such, all hands must be on deck to support the tax system and make it function efficiently.
“However, it is surprising that some people have begun to play politics with tax revenue generation.
“We humbly invite the President to step-in to dissuade political tax gladiators to sheath their swords. Tax revenue is an inherently apolitical issue; it should be treated as such by all, independent of their political leaning”, the FIRS Chairman said.