The West African Institute for Financial and Economic Management (WAIFEM), has called on the Federal Government to explore property tax source for improved revenue to meet its growing funding obligations on good governance.
The Director-General of the Institute, Baba Yusuf Musa, who gave the charge at the sidelines of the just concluded World Bank/IMF Annual Meetings in Marrakech, Morocco, pointed out that there was the need for government to improve the ratio of property tax to GDP from the current less than one per to at least five per cent in the medium term.
Noting that other countries with economic prospects like Nigeria are recording a property tax to GDP ratio of around 10%, the management expert maintained to achieve this the rich must be taxed and that Nigeria still had a long way to go in terms of mobilising the actual tax revenue that it should generate from property assets.
He explained: “When you take the property tax ratio to GDP of Nigeria is virtually less than one per cent, despite all the wealth that we have. The number of buildings, the number of cars that we have in the country.
“When you take the ratio of properties to GDP is less than one per cent compared with average of about five to 10 per cent in lower middle income countries like ours. That is one source that we can look at, and there are several opportunities to mobilise those tax revenues on properties.
“Just take the capital cities of any of our states and see the number of buildings, how many landlords are actually paying tax to the government.
“If you take that ratio, you realise that there are very few and there are just some minimal issues that the government should do to mobilise those ones.
“We need to have a register that identifies who the owners of properties are, and have a reporting format that can easily be tracked. If you give out your house on rent, it is a source of income and you should declare it and pay a certain percentage but that has not been happening. That is why people are complaining.
“The problem is that the civil servants, all employees in the formal sector are the ones taxed by the government but those that are in the informal sector, and those who have properties, who are millionaires are actually evading the tax that they were supposed to pay. That is one source.
“Another source is digitalisation and over the years, we should have addressed the issues that relate to digitalisation. We have actually tried to digitalise the collection process, but there are rooms for improvement. In the collection process, checks and balances should also be improved.
“For instance, if one is to pay a certain amount of money online to the revenue authorities, in many cases you will find that when you want to pay the tax the website is not working, but if you walk physically there to the Internal Revenue Department, somehow it will work.
“So, in my view, there has to be some form of monitoring mechanism that at least someone should be checking to see that all these are things working so that investors and those who are willing to pay tax online should have easy access”, Baba stressed.
