The Presidential Committee on Tax Reforms and Fiscal Policy has proposed a substantial reduction in Nigeria’s extensive list of taxes and levies, which currently surpasses 60, aiming to streamline them into a more manageable single-digit figure.
The committee presented an interim report on the new tax policy, to President Bola Ahmed Tinubu yesterday, expected to reduce tax burden on poor Nigerians, despite the revenue target of 18 per cent tax to Gross Domestic Product (GDP) ratio, as against current less than eight per cent tax to GDP.
Providing an overview of the new policy after presentations to the President, Taiwo Oyedele, the chairman of the Presidential Committee on Tax reforms, hinted that one of the basic impacts of the new policy is reduction of tax burden on poor Nigerians.
This recommendation was conveyed by the Committee’s Chairman, Taiwo Oyedele, during a press briefing on Tuesday, following the submission of their initial report to President Tinubu at the State House in Abuja.
Accompanied by the acting chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji, Oyedele said that the Committee’s primary objective is the consolidation of taxes at all governmental levels, with the ultimate goal of reducing the total count to fewer than 10.
He said this strategic move is part of a broader effort to reform the nation’s tax policies and eliminate obstacles to businesses in Nigeria.
Oyedele revealed that the Committee has already commenced the process of rewriting the nation’s tax laws, a crucial step in establishing a more standardised and efficient tax administration.
Notably, he emphasised that restructuring the tax system should be resolved through stakeholder engagement and the National Assembly, rather than relying on the courts, citing the complexities surrounding the Value Added Tax (VAT) issue.
It was further disclosed that, unofficially, Nigeria has an astonishing array of over 200 different taxes, which place a substantial burden on the population and create significant challenges for citizens.
He said “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 number 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; multiplicity of taxes.
“We have over 60 taxes and levies, officially collectible 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 per cent, 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, 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 and the whole idea is we think that some of the reforms we need to introduce have to go to the constitution itself, and 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 .