By: Grace Chigbu
ABUJA – In a monumental move set to revolutionize Nigeria’s complex taxation system, the Presidential Committee on Tax Reforms and Fiscal Policy, headed by Taiwo Oyedele, has proposed a strategic reduction of Nigeria’s exhaustive list of taxes and levies. The current tally exceeds 60 and is anticipated to be streamlined to a more manageable single-digit figure.
This policy proposal was presented in an interim report to President Bola Ahmed Tinubu yesterday. Despite aiming to meet the ambitious revenue target of achieving an 18% tax to Gross Domestic Product (GDP) ratio, compared to the existing rate of less than 8%, a fundamental goal remains the alleviation of tax burdens on the nation’s poorer citizens.
Post-presentation, Oyedele, with Zacch Adedeji, the acting chairman of the Federal Inland Revenue Service (FIRS) by his side, outlined the new tax strategy. Their vision focuses on consolidating taxes across governmental levels, aiming for a count of less than ten, and in doing so, enhancing the ease of doing business in Nigeria.
Highlighting the broader objective, Oyedele shared, “This strategic move forms part of our comprehensive effort to reform the nation’s tax policies and remove barriers for businesses in Nigeria.”
In addition to reducing the number of taxes, the Committee is already deep into the task of overhauling the country’s tax laws. Such an endeavor is pivotal for the establishment of a standardized and efficient tax administration. Stressing on collaboration, Oyedele insisted that reshaping the tax system should primarily involve stakeholder engagement and the National Assembly. He pointedly referred to the intricate issues surrounding the Value Added Tax (VAT) as a case in point.
Delving deeper into Nigeria’s taxing reality, Oyedele shed light on the staggering unofficial number of taxes, which exceeds 200, and its detrimental effects on citizens. “We’ve identified over 60 taxes and levies officially collected by various levels of government. The actual count, when you include unofficial levies, is even more daunting and adversely impacts our people,” Oyedele explained.
Such an exorbitant number of taxes has not only put unnecessary pressure on the common people but has also led to significant revenue leakages. “Countries like South Africa generate more than our entire national tax revenue from a single tax. An inflated number of taxes creates opportunities for leakages and unauthorized entities pocketing funds,” Oyedele elaborated.
He cited a telling example of the Market Traders Association of Nigeria (MATAN) sharing that hawkers selling bottled water in markets are subjected to seven different taxes daily. “Such practices don’t align with our vision for the nation,” Oyedele commented.
The ongoing phase involves meticulously rewriting tax laws and working closely with legislative bodies. The Committee believes that some reforms might even necessitate constitutional amendments to clarify taxing rights between government levels. With the VAT dispute as a backdrop, Oyedele stressed the importance of collective decision-making, emphasizing, “The solution will stem from Nigerians unifying to identify the most effective approach.”
He further announced the initiation of public consultations and stakeholder engagements open till November 15th. “In just a few days, we’ve received input from every state in Nigeria. This is only the beginning,” he optimistically stated.
In a related development, banks in Nigeria are ushering in reforms to enhance customer satisfaction. Patrons are encouraged to share their experiences, ensuring swift and decisive action from management in addressing grievances.