The Presidential Committee on Tax Reforms and Fiscal Policy says its target is to streamline the extensive list of officially collectable taxes and levies, which currently exceeds 60, into a much more manageable single-digit number.
The committee says it aims to consolidate these taxes at all levels of government, reducing the total number to less than 10.
The Chairman of the Committee, Mr. Taiwo Oyedele made these known on Tuesday while addressing State House Correspondents on the fundamental aims of the committee on reforming the Nigerian tax policy and removing impediments against businesses in Nigeria.
Mr. 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, pointing 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.
Consultations
Oyedele further stated that the committee has 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 .
“We’re all familiar with the dispute around VAT law that says you know, 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 is 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 input from every single state in Nigeria and we’re just starting.”
The Chairman of the Committee who affirmed that most of the reforms may require amendments to the Constitution, stated that lack of clarity about taxing rights between levels of government is a major challenge the country is facing.
“We have over 60 taxes and levies, officially collectable by federal government, state government and local governments. Unofficially those taxes 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 Besides actually more than that of our revenue across federal state, and local government, 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. ”
Mr. Oyedele added that the shift in tax structure and revenue generation will redefine situations of financial leakages.
“Contrary to the belief that having a higher number of taxes leads to increased revenue, there is no concrete evidence to support this. In reality, a higher number of taxes can create opportunities for financial leakages and unauthorized entities to collect funds and retain them for their benefit.”
“So now we are that face of rewriting our laws. We spent time with the Senate and we would also do the same thing with the house of Assembly and the whole idea is we think that some of the reforms we need to introduce we have to go to the Constitution itself. You know, lack of clarity about taxing rights between levels of government.”
The Chairman of the committee also disclosed that the second phase of the committee’s report will reveal critical reforms. Which involves rewriting major tax laws addressing the multiplicity of taxes.
“What we have done since then, was discussed speaking to the various policymakers from the central bank leadership, to the finance minister, who is also the coordinating Minister for the Economy, to the FIRS and the Joint Task Board, and even to state governors. We also had sessions with the Senate. So we have been actively engaging with various key stakeholders pretty much trying to put the framework in place for implementing our recommendations,” he added.
