Indirect Taxes Rise By 18.88% To N3trn – NBS
The indirect tax burden on Nigerians rose by 18.88 per cent to N3.03tn in 2022 amid an economic downturn and rising inflation.
According to the National Bureau of Statistics, Nigerians paid N3.03tn as indirect tax in 2022, an 18.88 per cent increase from the N2.55tn that was paid in 2021. This is based on current basic prices.
Indirect taxes are taxes, which include value-added taxes, Customs or import duties, paid to the government by a producer and later passed on to a final consumer.
In 2022, Nigeria’s GDP grew by 3.40 per cent. Despite this, inflation grew from 15.60 per cent in January 2022 to 21.34 per cent in December 2022.
Rising inflation has contributed to increased economic hardship in the country. In 2022, inflation pushed five million more Nigerians into poverty. Between 2020 and 2021, inflation pushed about eight million more Nigerians below the poverty line, pushing the total number of poor people in the country to 90 million.
With the increase in inflation, the purchasing power of Nigerians has greatly eroded. According to the global bank, the value of minimum wage fell by 55 per cent from N30,000 in 2019 to N19,355 in 2022.
Recently, the Director-General, Nigeria Employers’ Consultative Association, Adewale-Smatt Oyerinde, stated, “The inflation has eroded the purchasing power and, unfortunately, those who are involved, especially people who are earning fixed incomes, are the most impacted.
“Since their incomes are fixed, there is no mechanism to hedge it against the steady rise in inflation.”
Despite rising cost of living, the Federal Government is intensifying its effort to increase its tax revenues in the country.
Recently, when disclosing its plans to increase revenue generation, the government stated, “These measures include improving the tax administration framework, including tax filing and payment; as well as introduction of new and/or further increases in existing pro-heath taxes like excise on sugar-sweetened beverages, tobacco, and alcohol. Mixed reactions have greeted the implementation of these measures.”
Also, the government has tried to introduce new taxes such as excise duty to boost revenue. There have been calls from the international scene for Nigeria to increase its tax rates.
The International Monetary Fund recently urged Nigeria to increase its tax rates to ECOWAS levels.