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Govt, stakeholders strategise against low tax-to-GDP ratio

By Chijioke Nelson
16 May 2016   |   1:12 am
The Minister of Finance, Kemi Adeosun and tax professionals have agreed that the reform of tax laws and revolutionised system of collection is long overdue.


Irked by a paltry seven per cent tax contribution to the nation’s Gross Domestic Product (GDP), the Minister of Finance, Kemi Adeosun and tax professionals, agreed that the reform of tax laws and revolutionised system of collection is long overdue.

Besides, the minister said government has also declared its intention to collect every dime related to tax, as it deploys technology for that purpose, in efforts to widen the base and enthrone a regime of efficiency in collection.

The unsavoury development was further manifested when compared with Cote D’Ivoire, Benin Republic, Egypt, Cameroun, Ghana, Cape Verde and South Africa, where tax-to-GDP ratio averages more than 19 per cent cumulatively.

The Minister, who represented President Muhammadu Buhari, at the just concluded 18th tax conference of the Chartered Institute of Taxation of Nigeria (CITN), in Abuja, said it is pathetic that inefficiency has marred collection processes, while leakages and corruption continue to dampen confidence of taxpayers.“We have improved collection and are reforming tax laws in line with evolving business environment,” she said.

Meanwhile, the Federal and state governments may have been assured of a new opportunity to increase revenue, as well as diversify sources, with efficient administration of property tax and broadening of the Value Added Tax base emerging as top choices.

However, for enhanced compliance to tax laws, experts have said that government must now exhibit responsibility in management of public fund, while the leaders must also take the lead in tax payment.

But the minister assured that the country would certainly recover from the current challenges with the implementation of the budget that is scripted to reset the economy.

The President of CITN, Dr. Olateju Somorin, in her address, pointed out that the huge gap between tax collection and the quantum left uncollected year after year must be addressed if the nation must make meaningful and sustainable progress in the face of parlous infrastructure across the country.

“A review of some of the tax laws has become overdue. Moreover, sustainable economic growth cannot be attained with only tax reform, without the review of the obsolete laws and tax rates in consonance with macro economic objectives and efficient tax administration machinery.
“Our tax system must be well structured such that the framework of tax exemptions, tax incentives and waivers are streamlined,” she said.

But the Director-General of the Lagos Chamber of Commerce and Industry, Muda Yusuf, noted that transparency in the use of public fund encourages the taxpayers to voluntarily comply.

He lamented the dire straight in which the state governments have found themselves because of the plummeted revenue profile, saying that property tax remains a veritable source of revenue for them, which proceeds must be used in the development of the areas they are collected.

With N682 billion cumulative Internally Generated Revenue in 2015 by states, against N2.69 trillion total budgets of the states, representing a paltry 18 per cent, he said their fiscal stability will remain threatened unless they develop more sources of earnings.

Also, a tax professional, Dr. Mark Abani, called on tax administrators reflect the change that is currently being preached by setting the pace in paying VAT and mandating their clients to do so too.

For government, he canvassed for continuous engagement and capacity building for taxpayers, as opposed to crisis management approach, which currently typifies what tax officers are doing.
Government must leaders to lead by example in tax compliance and “we want to see the President, ministers and other political appointees pay tax.”