Experts chart path to sustainable taxation for 2018 budget
With Nigeria’s abysmally low six per cent tax to Gross Domestic Product (GDP) ratio and attendant dependence on rents from natural resources for government finances, experts on economic matters has said that the paltry figure is not sustainable to fund the 2018 budget, as it requires significant improvement.
They stressed that Nigeria is currently not doing well in terms of tax to GDP ratio when compared to other West African countries.They submitted that achieving the key reform initiatives to improve revenues and others in the 2018 budget will depend largely on sustainable funding especially from taxes, noting that that taxation will continue to play a major role in the actualization of government’s fiscal policy and developmental objectives.
At a seminar on the 2018 national budget organised by the Chartered Institute of Taxation (CITN), the Director-General of the Budget office, Ben Akabueze said it became imperative to ensure expenditure plans in the 2018 budget is been implemented to stimulate real economic activities across different economic and social sectors.
Akabueze who made a paper presentation on “The 2018 FGN Budget and Key Imperative for Economic Development”, assured participants of government’s support to create the enabling environment for private sector to increase investment and contribute significantly to job creation and economic growth.
According to him, Nigeria faces massive development challenges that require much larger budgetary expeditions than is currently the case, size of budget will not deliver the expectations within timeline of when those things will happen.On the state of the economy, he said that the GDP growth still slowed but rebounding. While inflation is gradually declining, he noted that the exchange rate gap is narrowing and gross international reserves are also growing.
“With the population growing at 3%, we need to get the economy grow at a minimum of 7% with a double digit. That is why the ERGP envisages 7% growth by 2020. It is at that point that people will start feeling the growth. Till then, it feels like the country is still in recession.”
Similarly, the Partner, PricewaterhouseCoopers, Taiwo Ayodele, said it is fundamental we address our attitude to tax, predicting that the country’s tax to GDP ratio can improve but not significantly in the immediate to medium term.On some deficiencies that may delay the improvement in the medium term, Ayodele hinged on economic stimulation and tax collection procedures which he said are factored on low tax administrative capacity, lack of data (harmony), large informal sector not captured in tax base and trust deficit.
Reasons the country has slow processes for tax law changes, he said, “Our lawmakers don’t seemed to be interested at all. We have lack of in depth understanding and weak institutions. Some people that are taking decisions don’t even understand issues they are taking on.
“We have fundamental issues with our constitution and it is the beginning of all the problems. It doesn’t have clear delegation of who can do what in the tiers of government. There is lack of robust data for decision-making.”
In his keynote address, the President and Chairman of council, CITN, Cyril Ede stated that the budget seminar as a tool for consolidating economic recovery and catalyzing growth was key as it would afford the opportunity to review key areas in the budget and propose its successful passage, noting that government will not rest on its oars to provide a sustainable path on implementation of the 2018 budget.
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