…as Tinubu inaugurates committee
…vows to end overreliance on borrowing
…subsidy removal increases Nigeria’s revenue to GDP by 2% – World Bank
KEMI OMONIYI
ABUJA, Nigeria – The Federal Government of Nigeria has initiated moves to close the about N20 trillion tax revenue gap in the country annually.
This according the Chairman of Fiscal Policy and Tax Reforms Committee, will help to make the country financially buoyant to fund its projects thereby putting an end to overreliance on borrowing.
This is even as President Bola Tinubu expressed his resolute commitment to break the vicious cycle of overreliance on borrowing for public spending, and the resulting burden of debt servicing it places on the management of Nigeria’s limited government revenues.
Inaugurating the Presidential Committee on Fiscal Policy and Tax Reforms, chaired by Mr. Taiwo Oyedele, on Tuesday at the Presidential Villa, Abuja, the President charged the committee to improve the country’s revenue profile and business environment as the Federal Government moves to achieve an 18% Tax-to-GDP ratio within three years.
The President directed the Committee to achieve its one-year mandate, which is divided into three main areas: fiscal governance, tax reforms, and growth facilitation.
He also directed all government ministries and departments to cooperate fully with the committee towards achieving their mandate.
Tinubu told the Committee members the significance of their assignment, as his administration carries the burden of expectations from citizens who want their government to make their lives better.
”We cannot blame the people for expecting much from us. To whom much is given, much is expected.
”It is even more so when we campaigned on a promise of a better country anchored on our Renewed Hope Agenda. I have committed myself to use every minute I spend in this office to work to improve the quality of life of our people,” he declared.
Acknowledging Nigeria’s current international standing in the tax sector, the President said the nation is still facing challenges in areas such as ease of tax payment and its Tax-to-GDP ratio, which lags behind even Africa’s Continental average.
“Our aim is to transform the tax system to support sustainable development while achieving a minimum of 18% tax-to-GDP ratio within the next three years.
”Without revenue, government cannot provide adequate social services to the people it is entrusted to serve.
”The Committee, in the first instance, is expected to deliver a schedule of quick reforms that can be implemented within thirty days. Critical reform measures should be recommended within six months, and full implementation will take place within one calendar year,” the President directed.
Speaking with State House Correspondents after the inauguration, Oyedele explained that “there is a huge tax gap. What that means is, as of today without introducing any new taxes. If you get everyone that needs to pay their taxes to pay, we will not be where we are.”
According to him, tax gap is somewhere in the region of N20 trillion, and we will ensure we close the gap to generate more revenue for the country.
Oyedele said, “In addition to that, you would also imagine that we have in efficiencies in the way we collect the little that we currently collect, and that inefficiency is coming from… Sometimes, I think in the 2023 budget we have, like 63 MDAs they were given revenue targets. Those MDAs want to be able to focus on their primary duties of why they were established.
“The revenue mandate is a distraction for them. You have the FIRS for example. So FIRS is built up and created to administer taxes efficiently. Imagine that we asked the FIRS to collect those revenues on their behalf.
“So those agencies by focusing on their primary mandate, they will facilitate the economy development we’re looking for. FIRS will collect the revenues efficiently, which means not only is the top line growing, the cost of collection is reducing, and that leads to a much bigger margin to take care of the people.”
Oyedele pledged the total commitment of members to give their best in the interest of the nation.
“Many of our existing laws are out-dated, hence they require comprehensive updates to achieve full harmonisation to address the multiplicity of taxes, and to remove the burden on the poor and vulnerable while addressing the concerns of all investors, big and small,” he said.
Recounting the President’s sterling track record on revenue transformation, the Special Adviser to the President on Revenue, Mr. Zacchaeus Adedeji described the committee members, drawn from the public and private sectors, as accomplished individuals from various sectors.
”Mr. President, you have the pedigree when it comes to revenue transformation. You demonstrated this when you were the Governor of Lagos State over 20 years ago,” the Special Adviser said.
Also, the World Bank’s Country Director for Nigeria, Shubham Chaudhuri said that the removal of subsidy payment has increased the nation’s revenue to Gross Domestic Product (GDP) to two percent, strengthen the economy’s strength.
Chaudhuri said, “just the fact that what Mr President did on his first day in office, which is eliminate fuel subsidies that already added close to two percent points of GDP to government revenues.
He said that Nigeria was losing about N10 trillion per year payment of subsidy. Right now the target is 18%, over time, it will grow.
“Most, if you look at other sub Saharan African countries, or I would actually say other middle income countries, countries like India, Indonesia, it would be good to see they’re not very high. It’s about between 15 to 20% of GDP.
“At a minimum, I think Nigeria, we would hope would get there from seven to 8% of GDP, that it is today.”
