Current Tax Structure Hampering Nigeria’s Economic Growth – Oyedele

brtnews
6 Min Read

The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Mr. Taiwo Oyedele, on Monday flawed the current tax system in view of its multi-dimensional loopholes, especially for its multiplicity and other administrative incoherence, describing it as one of the militating factors responsible for under-performance of businesses and the nation’s economy.

Oyedele, who made this remark in his paper presented at the Joint Tax Board (JTB) meeting in Abuja with the theme “Harmonization and codification of taxes at the National and Sub-national levels: Key to achieving a tax friendly environment in Nigeria”, specifically linked the inefficiencies in the tax system to the enabling tax laws at all tiers of government.

To address the challenges, the tax expert canvassed the need for urgent amendments of the laws at national and sub-national levels in order to optimally explore tax as the primary source of revenue for national development.

According to him, the constitutionally-supported tax laws is largely accountable for the current multiplicity of taxes such that in most cases, the federal, state and local governments are taxing Nigerians, especially the businesses, in a manner that is crippling most businesses and making Nigerians paying taxes to detest taxation.

Using recent statistical data at national and international levels to support his position, the committee Chairman, noted that if well administered, personal income tax held the potential for huge revenue that should be adequate for funding the nation’s political economic development.

Oyedele, who used South Africa as a case study, disclosed that in 2021 alone, South Africa with a population of about 60 million people generated about 35.5% of the R1 563.8 billion annual tax revenue from Personal Income Tax (PIT) while Nigeria with a population of over 200 million people raked in about N1.7 trillion from PIT in the same year.

He explained: “Personal income tax is the most reliable source of revenue income globally. Nigeria’s tax revenues over the years have been grossly inadequate as the problem of multiplicity of taxes remains one of the biggest constraints to businesses with the attendant negative implications for the performance of the economy.

“The solution to our lingering tax revenue shortfalls is to holistically reappraise the laws and amend the Constitution which fundamentally created the problems right from the beginning. We don’t need more taxes to generate more revenue but rather we need to reverse the current order which imposes multiple taxes on the people and businesses that they cannot comply with.

“We need to understand our current tax collection structure and find a way of removing those taxes that are crippling businesses and discouraging ordinary Nigerians to pay taxes. Available statistics show that about 83% of Nigerians have low tax morale and this is a big challenge in our efforts to grow the economy and achieve national development.

“My dream as we continue to make efforts to improve the nation’s tax system is to get to a level where we don’t have more than 10 taxes nationwide. All that we need do is broaden the scope of tax collection through vertical and horizontal collaboration of tax agencies at all tiers of government and deploy appropriate technologies that will help to improve the efficiency of tax collection and administration nationwide and eliminate all forms of abuses”, Oyedele said.

To achieve this, the tax expert canvassed the need for the review of the principle of fiscal federalism to determine which tiers of government will collect which type of tax, adding that as Abraham Lincoln, a former President of the US, said “the best way to predict the future is to create it.”

The tax expert also talked about the abuses that had characterized tax administration by many Ministries, Departments and Agencies (MDAs) as another big challenge to tax administration nationwide and stressed the need for governments to stop the practices and allow only revenue agencies with constitutional mandate to handle tax administration at all levels of government.

He pointed out that stopping such MDAs from collecting revenue will let them focus on their primary mandate while the revenue services/agencies will collect for them and the government through the established process and  give them how much they need.

Oyedele appealed to the government also ensure that if they approved budgets for MDAs such funds are released to them so that people will stop creating their own taxes here and there which is killing business.

On the way forward, he said: “Very soon, the President is inaugurating the Presidential committee on fiscal policy and tax reform tomorrow and then we should start work immediately. With the help of God and support from Nigerians, within the next one month, we should start seeing some progress.

“These are not problems you solve overnight but once you agree that as a people we have a problem, we can also find a solution because we have a lot of smart people. Sometimes, political will is the last man that we struggle with. It appears now that we have the political will, we have to try our best”, Oyedele promised.

Share This Article