President Muhammadu Buhari has restated his administration’s commitment to an efficient tax administration in order to improve tax revenue and guarantee sustainable growth of the country in the years ahead.
The President, who made this promise while declaring open the second National Tax Dialogue Week, with the theme, ‘Tax Harmonisation for Enhanced Revenue Generation,’ at the Presidential Villa, Abuja, expressed concern about the current tax system, characterized by fragmented administration, multiple and sometimes, overlapping taxes.
A statement by the President’s Special Adviser to the President (Media & Publicity), Femi Adesina, quoted Buhari as saying that the current tax system was quite different from what obtains in other climes with efficient fiscal policy instruments, hence the need for Nigeria to adopt global best practices in taxation matters.
The President said: “In most tax-efficient nations, tax administrative processes and practices are harmonised 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.
“Harmonising taxpayer identification across the country is a good start, but we must do more to promote ease 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.
“Multiplicity of tax administration is as undesirable as multiplicity of taxes; it creates uncertainty and instability and above all, it is inefficient”, Buhari added.
He told participants at the forum that in the face of dwindling revenues from commodities that there was an urgent need to maximise domestic revenue within the extant tax policies and laws.
To achieve this, the President proposed improved tax revenue for the country which would not necessarily impose new tax rates on Nigerians.
He stressed: “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”, the President added.
On Nigeria’s Tax-to-GDP ratio, Buhari also canvassed the need for the country to do more in securing a buoyant domestic revenue base to bequeath an enduring economic foundation, political stability and social harmony to the next generation of Nigerians.
The President cited the Organisation of Economic Cooperation and Development (OECD) Revenue Statistics in Africa 2021, which reflected that the average ratio of Tax-to-GDP of 30 selected African countries in 2019 was 16.6 per cent while Nigeria recorded a mere 6.0 per cent to justify his position on the need for a more efficient tax system in the country.
He stressed: “It is obvious that much needs to be done in the area of tax revenue mobilisation. It is my expectation that the discussions at this 2022 National Tax Dialogue will be focused on what we must do to maximise legitimate revenue collection and massively improve the Tax-to-GDP ratio.”
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.
She listed the main tax revenue objectives of the Federal Government as including developing an economy that does not lean too heavily on resource wealth, to institutionalise 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; and 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.
Speaking at the forum, the Chairman Federal Inland Revenue Service (FIRS), Muhammad Nami, thanked the President for his directive to government agencies to enable FIRS connect to their ICT systems for tax administration purposes.
He pointed out that this singular pronouncement softened the grounds for the Service to roll-out its system for seamless acquisition of data.
Nami 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 mobilization.”
On the remittances of the Service to the Federation Account, he said that statistics from March 2022 Federation Account Allocation Committee (FAAC) meeting showed 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 per cent) while non-tax revenue from all other agencies amounted to N289.55 billion (36.06 per cent).
The Chairman further clarified that that the FIRS’ average tax contribution to FAAC in 2021 was 59.45 per cent.
Recalling his views in the 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, Nami said that “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, irrespective of their political leaning”, the FIRS boss added.
