Tax reforms: FG plans streamlining over 200 taxes to less than 10

Adejoke Adeogun
Adejoke Adeogun
Taiwo Oyedele

The Presidential Committee on Tax Reforms and Fiscal Policy on Tuesday, October 24, said its target is to cut down the long list of officially collectible taxes and levies, which currently exceeds 60, into a much more manageable single-digit number.

The chairman of the committee, Taiwo Oyedele, disclosed this while addressing journalists at the State House, Abuja, after submitting his team’s maiden report on its ‘quick-win achievements in the first thirty days to President Bola Tinubu.

According to Oyedele, who was accompanied by the Chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji, the committee’s aim is to consolidate these taxes at all levels of government, reducing the total number to less than 10.

Speaking on the fundamental aims of the committee on reforming the nation’s tax policy and removing impediments against businesses in Nigeria, Oyedele said his team had commenced the process of rewriting the nation’s tax laws as part of the process of birthing a standard and more effective tax administration.

He added that the task of restructuring the tax system in the country will not be achievable through the courts, citing the circumstances around the Value Added Tax (VAT), but by assembling stakeholders for deliberations and approaching the National Assembly.

Oyedele also revealed that unofficially, there are more than 200 different taxes in Nigeria, which significantly burden the population and make life challenging for the citizenry, he pointed out that approximately 96% of the total revenue collected by the federal, state, and local governments is derived from a small set of fewer than 10 taxes in the country.

He added that Nigeria is currently at a critical phase of revising its laws and regulations on taxation, he disclosed that the committee had engaged with the Senate and the House of Representatives with the objective of addressing all necessary reforms.

Oyedele further stated that the committee had commenced public consultation and stakeholder engagement on tackling some of the controversy around the VAT law asserting that solutions will only come from Nigerians and not from the law court.

“So all we did today was to formally present the report to Mr. President, but I will say that once we get the nod from Mr. President, it will be like just switching on the tap, and then the implementation starts immediately.

“There’s so much work for us to do, this is just Milestone #1, it is what we call the quick wins. The second phase, which is where we are now, is the critical reforms. Those critical reforms involve even rewriting our major tax laws, addressing something that everybody in this room will be very much familiar with; the multiplicity of taxis.

“We have over 60 taxes and levies, officially collectable by the federal government, state governments and local governments. Unofficially, those taxes are over 200, making life difficult for our people. So the objective we have, and that’s what we’re working towards, is to bring all of that to a single digit.

“So the taxes at all levels of government combined, we think should be less than 10 because actually about 96%, actually more than that, of our revenue across federal, states, local governments, currently is generated from less than 10 taxes and we’ve seen countries like South Africa generating more than our entire national tax revenue from just one tax.

“So there’s no evidence to show, in fact, the contrary is true that the more the number of taxes you have, actually the less revenue you collect because it just creates the opportunity for leakages and some non-state actors collecting money and keeping it to themselves.

“We were speaking to traders, MATAN (Market Traders Association of Nigeria) and they said to us, that people selling pure water in the market collect seven tickets every single day. Why should someone who is just trying to hawk pure water to keep body and soul together have to pay seven taxes on a daily basis? It doesn’t make a lot of sense to us.

“So now we are at that phase of rewriting our laws. We spent time with the Senate and we would also do the same thing with the House of Assembly the whole idea is we think that some of the reforms we need to introduce have to go to the Constitution itself, there lack of clarity about taxing rights between levels of government.

“We’re all familiar with the dispute around VAT (Value Added Tax). We think that the solution will not come from the courts, it will come from Nigerians coming together to say ‘actually, this is the best way to deal with these matters’.

“We have commenced our public consultation and stakeholder engagement, it’s open until the 15th of November. I’m glad to inform you that after just a few days of opening up that platform for engagement, we have received inputs from every single state in Nigeria and we’re just starting”, he said.

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