The Federal Government, in its bid to widen the revenue base of the country, especially from the non-oil sector, has set an aggressive target for increasing tax collection.
This was made known by President Muhammadu Buhari at the 21st annual tax conference organised by the Chartered Institute of Taxation of Nigeria (CITN) on Wednesday in Abuja.
President Buhari who was represented by the Permanent Secretary, Federal Ministry of Finance, Dr. Mahmoud Isa-Dutse, said that tax collection must grow in line with growth in the economy but this has not been the case in Nigeria and has become a challenge.
According to him, “Our tax system must reflect the nature of our commercial activity levels. Oil is just above 10% of our GDP but it represents a disproportionate share of our tax revenue.
“We will therefore develop a framework that mobilizes revenue from the non-oil sector. Our tax system must be dynamic in order to respond to an ever evolving commercial landscape and to increasing technology driven business models.
“As part of our drive to increase non-oil revenue, we have set an aggressive target for increasing tax collection. This is a reflection of the fact that the current level of compliance is low and in some cases, the effective tax rate paid by those that are compliant is lower than expected.”
He further added: “This administration has been instrumental to critical reforms in the Nigerian Tax system, through, for instance, the introduction of the Tax Amnesty Regime under the Voluntary Asset and Income Declaration Scheme (VAIDS) and the Voluntary offshore Assets Regularization Scheme (VOARS).
“These measures have no doubt led to improvement in voluntary tax payment compliance by the citizenry.
“On the Voluntary Asset and Income Declaration Scheme (VAIDS), for instance, 5,122 applications were received, at the end of July 2018, when the Scheme had gone through a 12 month cycle and entered sunset.
“Out of these applications, 1,006 made full payment, 1,613 had outstanding payments to make and 2,503 fell under those who did not furnish adequate information on their tax status.
“Arising from these applications, N92.67billion tax liability was declared. N34.67 billion had been paid out of declared liability. The outstanding liability of N56.81 trillion will be paid in installments.
“In all, 16,906 assets were declared under VAIDS. Of these, 3,317 are immovable assets, 13,771 are moveable assets, while 205 represented intangible assets & Investments.”
While addressing stakeholders and players in the taxation sector in the conference themed ‘Taxation and National Development: Unlocking the Potential ofTaxation’, Buhari noted that Nigeria’s tax-to-GDP ratio although has improved from 6% to about 9% in the last 3 years, is still the lowest in the world.
“Today, lessons from countries that have depended, solely, on revenue from oil have proven to be quite instructive.
“This is symptomatic of our undue reliance on oil revenue, which has resulted in fiscal imbalances in our national financial landscape.
“We can, therefore, not afford to waste precious time at second-guessing the fiscal direction or policy stance of government.
“We are clear about the overriding need to use taxation tools in achieving our objectives and delivery of our campaign promises, for the greater good of the people of this great Country, Nigeria.
“This government is changing that narrative with our commitment towards ensuring judicious use of funds through the strict enforcement of the Treasury Single Account (TSA) policy and zero tolerance for corruption. We will ensure that every kobo of public fund is accounted for.
“The achievement of the government’s objective of widening the tax base for improved revenue collection through voluntary compliance in line with international best practice will be enhanced through cooperation with, and support of the Institute being a major stakeholder in the tax system of our nation.
“We are happy with the result of our sustained efforts towards enhanced tax compliance in fiscal year 2018, which culminated in the Federal Inland RevenueService (FIRS) announcement of a record collection of N5.32 trillion.
“This was achieved through sheer hard work and provision of the political will and support to that agency, among other relevant revenue collection agencies. We will continue to give this support for increased revenue performance, as required,” he said.
The Chairman of Heirs Holdings, Mr. Tony O. Elumelu, in his paper delivery noted that we can never talk about national development without the inputs from Micro, Small and Medium Enterprises (MSMEs).
According to him, “On one hand, our citizens demand good standard of living – education, healthcare, infrastructure, accommodation, security, moral values etc.
“On the other hand, government needs revenue (money) to provide for all of these. Unfortunately, the revenue earning of government is dwindling because of dependence on oil.
“One of the ways that government can fund the legitimate demands of the citizens is through an increase in revenue through taxation.
“Nigeria with a population of over 200 million, our tax-to-GDP ratio is approximately 6%. Rwanda with a population of about 10 million, its tax-to-GDP ratio is 16%.”
Elumelu explained that 75% of Nigerians do not see anything wrong with not paying tax because according to them, they are a local government to themselves; they provide electricity, water etc., for and by themselves.
He therefore urged government and other stake holders to embark on mass communication and mobilization on why Nigerians should pay their taxes, and also strive gain the confidence of the people to know that their taxes will be used well for the collective aspirations of the people.
The Chairman of Council of CITN, Chief Cyril Nwobodo, said the purpose of the conference is to awaken Nigerians on the importance of taxation in developing our country.
“People don’t feel like paying taxes; they do not feel the eagerness to pay tax, and see it as a burden. We are therefore trying to lessen the burden and make people appreciate what taxation can do in the country,” he said.