The Federal Government is planning extensive tax reforms that may slash over 52 current taxes to 10.
In a presentation in a lecture, entitled, “Revenue, Challenges and Opportunities”, on Saturday over Zoom, the Special Adviser to President Bola Ahmed Tinubu on Revenue, Mr. Zacch Adedeji, said the tax reforms would involve harmonisation to remove multiple taxation.
He said the current tax system was broken, with the different levels of government working at cross puropses. This situation, he added, was worsened by poor and dated regulatory laws and framework.
He said the Federal Government would work with states to achieve the objective but warned that the allocation of states that do no comply may debited to the extent of their non-compliance.
He said there was hardly any country in the world with the kind of chaotic tax system that exits in Nigeria. He also added that poor data collection, mining and use compounded the country’s problems, saying the National Identification Number (NIN) would be the single identification system.
Adedeji said, repeatedly, that although some had expressed apprehension about taxation, “the government will not tax poverty. We intend to tax the fruit, not the seed.”
He lamented the multiplicity of taxes and multiple revenue collection agencies, saying, it is largely fragmented, rudimentary, and adding to business risk.
Adedeji emphasised the importance of enhancing revenue generation without stifling businesses or hampering overall economic growth.
While lamenting that Nigeria ranks very low on the global ease of paying taxes, he added that, tax to GDP ratio at 10.8 per cent is much below African average and it is one of the lowest in the world.
One of the key objectives of the reform,according to Adedeji, is to alleviate the financial strain on the less privileged members of society.
Adedeji stressed the need to let the poor breathe by implementing tax policies that are considerate of their circumstances, ensuring that they are not burdened beyond their capacity to pay.
On the opportunities in the revenue system, he said, harmonisation of taxes would address multiple taxations which have been a huge burden on businesses and expand the room for them to operate.
He said unified revenue agencies will enhance efficiency and block leakages and will also allow the various MDAs to focus on their primary functions
He also stressed the need to simplify the tax laws and administration to improve the ease of compliance
“Effective use of technology and tax intelligence for revenue administration to widen the tax net is critical to this reform.
“Moreover, it gives opportunity for fair and equitable tax system to protect the most vulnerable persons and small businesses, while it will also eliminate unfriendly tax provisions which serve as impediments to investments and business growth.”
Adedeji added that measures would also be taken to ensure effective coordination and collaboration in a sustainable manner.
“We would also take steps to drive transparent revenue reporting which will help to build trust between the people and the government,” he said.
He noted that, effective utilisation of tax and other revenues will strengthen the social contract and improve overall standard of living.
The lecture, the second in the series, was hosted by Topaz, the University of Lagos Class of 1988.
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