The Federal Government Friday launched an ambitious tax drive aimed at doubling revenue over the next three years.
The ways and means of the revenue generation initiative will be worked out by a panel constituted by President Bola Tinubu.
Heading the panel is Taiwo Oyedele, fiscal policy partner and Africa tax leader at PricewaterhouseCoopers LLP.
Oyedele, who was recently quoted as saying the federal government could generate N20 trillion revenue annually “if it is not lazy” will be assisted by experts from both the private and public sectors, Special Adviser to the President on Special Duties, Communications and Strategy, Dele Alake, said in a statement.
The objective, he said, was to transform the tax system to support sustainable development and achieve a minimum tax to gross domestic product ratio of 18% within the next three years.
Nigeria’s Tax-to-GDP ratio in the last 12 years has hovered between 5 per cent and 6 per cent and rose to 10.86 per cent by the end of 2021.
In effect, the new initiative will allow government to generate revenue in relation to the size of the country’s GDP.
A tax-to-GDP ratio provides a useful look at a country’s tax revenue because it reveals potential taxation relative to the economy.
Nigeria’s GDP was worth $477.39 billion in 2022, according to official data from the World Bank.
Going by President Bola Tinubu’s projections, government is targeting around N32.9 trillion tax revenue as against the current N10.1 trillion recorded by the Federal Inland Revenue Service (FIRS) for 2022.
If realised, the federal government could comfortably service the country’s debts now heading to N80 trillion on account of the Naira devaluation.
The new administration has made it clear that it wants to harvest more revenue but in humane and attractive manner.
Special Adviser to the President on Revenue, Adelabu Adedeji, while speaking on the creation of the Presidential Committee on Fiscal Policy and Tax Reforms said: “Our aim is to transform the tax system to support sustainable development and achieve a minimum of 18 per cent Tax to GDP ratio within the next three years without stifling investment or economic growth.
Nigeria’s low Tax-to-GDP ratio, Adedeji said, “has led to an overreliance on borrowing to finance public spending which in turn limits the fiscal space as debt service costs consume a greater portion of government revenue, annually resulting in a vicious cycle of inadequate funding for socio-economic development.
He identified the key challenges confronting Nigeria’s tax system as “multiple taxes and revenue collection agencies, fragmented and complex tax system, low tax morale, high prevalence of tax evasion, high cost of revenue administration, lack of coordination between fiscal and economic policies, and poor accountability in the utilization of tax revenue.”
He said the establishment of this committee “reflects President Tinubu’s commitment to addressing these challenges and bringing about transformative reforms in fiscal policy and taxation.”
He added: ”The committee’s primary objective is to enhance revenue collection efficiency, ensure transparent reporting, and promote the effective utilization of tax and other revenues to boost citizens’ tax morale, foster a healthy tax culture, and drive voluntary compliance.
These efforts will not only improve Nigeria’s revenue profile but also create a more conducive and internationally-competitive business environment.
The setting up of the panel came on the heels of the President’s signing of four executive orders on Thursday to boost economic activities and reduce hardship.
Speaking on the committee’s establishment, the immediate past President/ Chairman of Council, Chartered Institute of Taxation of Nigeria (CITN), Adesina Adedayo, said Oyedele has the expertise and experience that qualify him to lead the committee.
He said Oyedele is conversant with private sector operations and how the companies are trying the cope with Nigeria’s operating environment, including tax matters.
He is equally conversant with government policies on tax administration and has the global expertise on tax taxation because of his position at PwC.
He said: “Taiwo Oyedele is not an outsider to private sector and also to public sector. He is the right choice that will enhance tax policy decisions and stakeholders balancing because he has a clear understanding on tax matters.”
Adedayo said the advice from the committee should, when presented, be given priority by the government as they have capacity to make Nigeria a country where businesses will thrive with ease.
Managing Director, Economic Associates, Dr. Ayo Teriba, said the appointment of Oyedele is commendable, and shows the President is serious about solving problems.
He said similar appointments should be made in other key segments of the economy, ensuring that experts who have distinguished themselves in different areas of endeavor make inputs on economic policies.
Teriba said the committee is to review and recommend to government the right policy directions on taxation.
He said the recommendations of the committee is what the business community will be waiting and reviewing when they are unveiled.
A profile of the new Committee Chairman provided in the statement described Oyedele as “a highly accomplished professional with extensive expertise in fiscal policy, taxation, and economic matters. He currently serves as PWC Africa tax leader.
“In addition to his role at PwC, Oyedele holds several important positions in prestigious organisations.
“He is the Thematic Lead for the Fiscal Policy & Planning Commission and serves as the Chairman of the West Africa Debt Management Roundtable of the Nigerian Economic Summit Group (NESG).
“Furthermore, he chairs the Taxation & Fiscal Policy Faculty Board of the Institute of Chartered Accountants of Nigeria (ICAN) and is a member of the Nigerian Taxation Standards Board.
“He also serves as a member of the Ministerial Committee on the implementation of Nigeria’s National Tax Policy.
“He is a member of the Global Tax Forum and has previously served as a member of the Global Governing Council of the Association of Chartered Certified Accountants (ACCA).
“As an educator, Oyedele holds the position of Associate Professor at the Babcock University Business School.
“He is an alumnus of the London School of Economics & Political Science, Yale University and Harvard Kennedy School Executive Education. He is a guest lecturer at the Lagos Business School and the Founder and President of Impact Africa Foundation.”
The Economist hails Tinubu’s “impressive first moves”
The influential international magazine, The Economist, in its latest edition brands Tinubu’s early moves as impressive.
The President, it says, “delighted reform-minded Nigerians by veering off-script to announce an end to subsidising petroleum products, which for decades has drained the treasury of revenues from the country’s most valuable natural resource.”
Continuing, it says Tinubu has not ceased to “shake the establishment with a string of night-time press statements which heralded the firing of his central bank governor, the top brass of the army and the heads of several key government agencies, including the police, the customs service and the financial crimes commission.”
To the magazine, Tinubu’s “biggest scalp” was that of Central Bank Governor Godwin Emefiele who was suspended on June 9 for what the president himself called the rotten financial system brought about by the CBN under Emefiele.
It adds: “Mr Tinubu’s speedy appointments on the security side are intended to help curb terrorism in the country’s northeast and the scourge of kidnapping in the northwest, as well as violence elsewhere. sbm, an intelligence outfit based in Lagos, the commercial capital, estimates that between July 2021 and June 2022, 3,420 people, including hundreds of schoolchildren, were kidnapped.
“Nigerians are hoping for livelier yet safer leadership under their new man.”