The Nation Newspaper

Tag: tax policy

  • NLC seeks review of tax policy

    The Nigeria Labour Congress (NLC) wants the federal government to review the existing policy on tax exemptions, tax holidays and profit repatriation because the current policy adds no value to sustainable growth through creation and sustained decent job creation and industrial value chain. The Congress also wants the government to reduce the overhead cost in the 2019 budget by reviewing the jumbo packages of the members of the National Assembly and political appointees.

    In a statement signed by the President, Comrade Ayuba Wabba, the NLC also wants the federal government to subject security votes of state governors to auditing by the office of the Auditor General of the Federation with a view to blocking leakages and conserving money for development. “We recommend that the 2019 budget provision for debt servicing should tilt more to local debt servicing. It is only when we have improved on local production and export that we can guarantee a proposed growth rate of more than the abysmal level of 1.8% in 2018 and a target of single digit inflation rate.

    “While we commend further the improved financial management policies that have led to an appreciable increase in tax revenue so far, we call for a further tightening of loopholes and leakages that encourage illicit finance outflows and corporate tax evasions. Specifically we call for a review of the policy on tax exemptions, tax holidays and profit repatriation all of which do not add value to sustainable growth through creation and sustained decent job creation and industrial value chain.

    “At the same time we demand that the government reduces the budget overhead cost by reviewing the allowances and jumbo pay of the members of the National Assembly and political appointees. We also demand that the so called security vote of state governors be subject to auditing by the federal auditor general with report made available and accessible for scrutiny where so required. This way it is expected that more revenue will be available for spending to boost the real sector.

    “The government must live up to its responsibility of managing the welfare and security of its citizens through Programmes and policies that give measurable output which must be adequately reflected and supported by the budget and the medium term expenditure framework,” the release read in part. The Congress commended the National Bureau of Statistics for its consistency in living up to its mandate of providing relevant statistical information and data on Nigeria’s economy.

  • IMF seeks tax policy changes for Nigeria

    IMF seeks tax policy changes for Nigeria

    •Explains why country keeps borrowing
    •Advises CBN to deepen forex market

    Nigeria needs a  new policy on taxation in view of  its very low level of revenue mobilization capabilities, the International Monetary Fund’s (IMF’s) Director of African Department Abebe Selassie said yesterday

    He told reporters  at the ongoing IMF/World Bank Annual Meetings in Washington, D.C, that  the Fund is already providing tax guidance to the country.

    Whatever decision the federal government eventually takes on tax reforms, he said, will have to be backed by the National Assembly.

    He said the Ministry of Finance has already identified certain   steps to be taken by way of tax administration, improving tax administration, and ensuring that people are paying appropriate taxes.

    “Whatever decision the Federal Government takes on adjusting the tax policy, it has to consult the National Assembly. The IMF has been providing a lot of support, technical assistance support and policy advice in this area,” he said.

    “But our guess is that there also is going to be need for tax policy changes for Nigeria, which has a very, very low level of revenue mobilization to improve that.

    “These resources are needed to help strengthen the infrastructure environment in Nigeria, to help invest in the many, many schools, that have to be built and improving health delivery.” Continuing, Abebe said: “Now, in terms of designing tax policy changes there is a way to do it, and indeed we advise countries and provide technical assistance on how to do this in a way that is progressive.

    “So, you know, the taxes are collected on people that are rich, the richer segments of society rather than the poor.  So, there is a lot of technical work that can be done to do that.

    “And again, I cannot stress, the key remains that Nigeria, we feel, needs to do a lot more investments both in infrastructure, and in human capital investment.”

    Abebe said that developing plans and models or reform strategies that are specific to Nigeria’s specific needs at this venture are important.

    He added:”on agriculture, given how big the size of the Nigerian economy is and given the potential that it has including an agriculture as it’s used to in the past, it is a sector that should be doing much better.

    “On the macro side, I think what is needed in Nigeria at this moment are mobilizing more revenues.  I think that is important to help the government invest more in health and education and building infrastructure that is going to be important for other sectors like agriculture, manufacturing to take off.”

    According to him, without energy, it’s difficult to have higher productivity activities to take place including in agriculture.

    “Addressing the energy issue requires a lot more public investment and so, the revenue mobilization angle being important.

    “But on the fiscal side, there is also a need to further improve the allocation of foreign exchange systems, there has been a strong improvement in that.  I think just creating liquid and deep foreign exchange markets, financing the reforms that have been taking place in the last couple of months is going to be important.”

    Selassie said that with the gap between the foreign exchange market rate, the bank rate and the parallel market rate was very wide earlier in the year with many businesses complaining about shortage of foreign exchange, not having enough access to foreign exchange.

    “I think that has reduced over the last four, five months, so that’s what we are encouraged by,” he stressed.

    He said the external financing environment facing the Sub-Saharan region has been supportive.

    Also speaking on Nigeria’s borrowing plans, he said the first public debt has risen in many countries in the region and that the medium level of debt in sub-Saharan Africa has increased from 34 per cent in 2013 to 48 percent of Gross Domestic Product in 2016.

    “Most of the pronounced increase in debt has happened in oil-exporting countries following the deterioration in their economic conditions, of course.  But we’ve seen debt levels increasing also in countries that have been sustaining high growth.

    “The main drivers behind this rapid debt accumulation have been the elevated level of fiscal deficits, growing interest bills, and valuation effects associated with exchange rate depreciation,” he said.

  • CITN: National Tax Policy will fix tax hitches

    CITN: National Tax Policy will fix tax hitches

    President, Chartered Institute of Taxation of Nigeria (CITN), Teju Somorin, has said the National Tax Policy, approved by the Federal Executive Council (FEC) will address challenges facing the tax system.
    Speaking during the 36th induction ceremony of the Institute in Lagos at the weekend, she described the tax policy document as a slim, simple and concise revised policy with clear implementation and monitoring strategies for stakeholders in the Nigeria tax system.
    She said the new document has defined “tax” as “any compulsory payment to government, imposed by law without direct benefit or return of value or a service whether it is called a tax or not.”
    Somorin said the policy has become necessary at this stage of Nigeria’s economic development and is consistent with the shift from direct to indirect taxes enshrined in the National Tax Policy.
    She said the 2017 budget did not propose increase in taxes but provides for expansion of tax horizon so that more people will start paying tax. The budget, she further noted, did not recommend increase in value added tax (VAT) but increase in VAT payable on luxury goods such as Champaigne among others.
    She recommended that since small and medium scale businesses are the engine of growth of every economy, especially in Nigeria where over 90 per cent of employers of labour, fall within this category, the qualification for the lower income tax rate applicable to small businesses should be reviewed in line with current economic realities.
    “The income tax rate for small businesses should be further reduced as an incentive to encourage compliance and promote Micro, Small and Medium Enterprises (MSMEs)”, she stated.
    She further recommended that a minimum threshold for VAT registration and compliance should be put in place in order to protect micro-businesses.
    She said the National Economic Council has approved the implementation of the Voluntary Asset and Income Declaration Scheme (VAIDS) aimed at addressing high rate of tax evasion in the country.
    “The VAIDS, which is likely to become operational next month, is hoped to boost the revenue portfolios of the Federal and State Governments. Indeed, FIRS is targeting an increase in tax contribution to the Gross Domestic Products to 18 per cent by 2020. The scheme will offer a window for those who have not complied with the extant tax regulations to remedy their positions by the provision of limited amnesty to promt voluntary declaration and payment of liabilities.
    The scheme will also have incentives in place to encourage early participation. For example, taxpayers will be allowed up to three years to settle their tax liabilities,” she said.
    She said the Stamp Duties Act (Amendment) Bill, 2017 is currently before the House of Representatives, undergoing legislative process.
    “It seeks to expand the scope of the Stamp Duties Act and address the current ambiguities in the law. The Bill will also legalise the controversial imposition of stamp duty on bank deposits while the definition of a “stamp” has been expanded to include electronic, internet and Point of Sale (POS) transactions. Other proposed changes include: Substantial increase in penalties, compulsory use of postage stamp instead of adhesive stamp and Imposition of stamp duty on all forms of agreements. Government Integrated Financial Information System (GIFMIS),” she said.

  • Bizman hails Okorocha’s new tax policy

    The Imo State government new tax policy recently received a boost when a renowned philanthropist and business mogul, Chief JohnPaul Ochemba, paid for all taxable adults in two autonomous communities of Ntueke and Ogwume in Ideato South Council Area of the state.

    The state government had directed that every taxable adult in the state will pay N3000.00 as a condition to access government services, especially the free education programme.

    But the new policy was greeted with widespread criticism as the indigenes of the state, especially the rural dwellers who insisted that they cannot afford the levy, describing it as illegal taxation.

    Meanwhile respite came for the two communities following the decision of the philanthropist to pay for over 600 couples.

    Speaking during the presentation of the cheques to the traditional rulers of the communities, Ochemba, said he was spurred by the good intentions of the state government, adding that the levy is insignificant compared to the many benefits of the free education programme.