Buhari: “Much is Needed In The area of Tax Mobilisation”
President Muhammadu Buhari has described Nigeria’s current tax system as fragmented and inefficient. He calls for a harmonised approach within a single system to boost revenue generation.
In a statement by the Special Adviser to the President on Media and Publicity, Femi Adesina, President Buhari spoke at the 2nd National Tax Dialogue on the theme, “Tax Harmonisation for Enhanced Revenue Generation”.
The president expressed his government’s commitment to improving tax revenue in the country through an efficient tax administration.
He expressed concern at the current tax system in the country, characterised by fragmented administration, multiple and sometimes, overlapping taxes, says: ‘In most tax-efficient nations, tax administrative processes and practices are harmonised within a single system.
“One key deliverable of this year’s tax dialogue is to promote synergy in tax administration among the different tiers of government.
“Harmonising taxpayer identification across the country is a good start, but we must do more to promote ease of doing business (including ease of tax compliance) in Nigeria.
“On our part, we have started by clarifying in the 2021 Finance Act that FIRS is the sole authority to administer tax for the Federal Government.
“This clarification became necessary in order to avoid taxpayers being burdened with multiple tax compliance obligations towards different agencies of the same government.
“Multiplicity of tax administration is as undesirable as a multiplicity of taxes; it creates uncertainty and instability; and above all, it is inefficient.”
Buhari stressed the urgent need to maximize domestic revenue within the existing tax policies and laws. He proposed improved tax revenue for the country which will not necessarily impose new tax rates on Nigerians.
“We all know that good intentions are not enough as they simply cannot pay for infrastructure, security or social amenities. We must therefore improve tax revenue without necessarily raising new taxes.
“Revenue from commodities, including crude oil, are too volatile and unreliable. Therefore, I pledge the government’s support for any viable initiative for improving tax revenue that should emanate from this dialogue,” he said.
On Nigeria’s Tax-to-GDP ratio, the president declared that the country also needs to do more in securing a buoyant domestic revenue base of the country that bequeaths an enduring economic foundation, political stability and social harmony to the next generation.
“According to the Organisation of Economic Cooperation and Development (OECD), in its Revenue Statistics in Africa 2021, the average ratio of Tax-to-GDP of 30 selected African countries in 2019 was 16.6% while Nigeria recorded a mere 6.0%.
‘It is obvious that much needs to be done in the area of tax revenue mobilisation
“It is my expectation that the discussions at this 2022 National Tax Dialogue will be focused on what we must do to maximise legitimate revenue collection and massively improve the Tax-to-GDP ratio”.
On the importance of the Tax Dialogue, which was instituted by the Minister of Finance, Budget and National Planning, and the Executive Chairman, Federal Inland Revenue Service (FIRS), the President noted that the first edition in 2021 was very productive and integral in influencing tax policy, as well as legislative and administrative changes that were introduced last year.
In addition to this, he says the most important measure of the success of the first edition is that the FIRS met 100% of its collection targets in 2021 and exceeded the N6 trillion revenue threshold for the first time.
Speaking on the success of FIRS, the President assured Nigerians that the present administration would continue “to maintain prudent management of our collective resources”.
The Chairman of FIRS, Muhammad Nami, thanked the President for his directive to government agencies to enable FIRS to connect to their ICT systems. He noted that this direction has softened the ground for the Service to roll out its system for seamless data collection.
On the remittances of the Service to the Federation Account, Nami announced that statistics from March 2022 Federation Account Allocation Committee (FAAC) meeting show that out of total revenue of N803.072 billion from all revenue agencies, tax revenue contributed by FIRS was N513.522 billion (63.94%) while non-tax revenue from all other agencies amounted to N289.55 billion (36.06%).
‘We are confident that by the time all the agencies achieve 100% compliance with the President’s directive, Nigeria shall be the envy of other countries for tax compliance and domestic tax revenue mobilisation,’ he says.