Despite its efforts to leverage the benefits of tax exemptions and concessions, the incentive has rather led to huge revenue loss for Nigeria, the Federal Government said on Monday.
The government said that although it was committed to reducing tax expenditure, the nation’s current revenue to Gross Domestic Product ratio of about seven per cent was poor and unsatisfactory.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, represented by the Director, Technical Services in the Ministry, Fatima Hayatu, said these in Abuja during a workshop on Tax Expenditure, organised by the Economic Community of West African States, under the context of the implementation of Support Programme for Tax Transition in West Africa.
The PATF aimed to improve the management of domestic taxation and ensure better coordination of taxation in the ECOWAS and West African Economic and Monetary Union regions.
The Minister observed that Nigeria’s low revenue generation capabilities had been an enduring challenge to past and present governments.
She said that although Nigeria was celebrated as the country in Africa with the largest economy, translating the wealth into revenue generation had remained a serious issue.
According to her, Nigeria is faced with challenges in mobilising domestic funds necessary for human capital development and infrastructure that are both drivers of sustainable economic growth and development.
Ahmed said, “Our current revenue to GDP ratio of about seven per cent is unsatisfactory and we are keen on exerting improving this by implementing various initiatives
“The case remains the same with our current contribution between oil and non-oil GDP, for which our analysis on oil revenue to oil GDP reveals as 39 percent while non-oil revenue to non-oil GDP as 4.2 percent. Our Value Added Tax revenue to GDP in Nigeria for example stands at less than one per cent (0.8 per cent) which compares unfavourably to ECOWAS average of 3.4 percent.
“So also, is our excise revenue which is 4.1 per cent compared to Ghana at 15.3 percent or Kenya at 19.5 percent. It is important to reiterate that though tax exemptions and concessions have for long being used by successive Governments in Nigeria to attract both domestic and foreign direct investments in the country with the expectation that the revenue foregone will lead to commensurate benefits in the economy in the form of employment generation, capital formation, wealth creation and poverty alleviation, revenue generation, technology transfer, amongst others, they constitute huge tax expenditures and revenue leakages to government”.
The Minister assured that the current regime of the President, Major General Muhammadu Buhari (retd.), would continue to emphasise on the need to examine tax expenditure component of the federal government aggregate spending.
The Minister said that the government had recently issued a tax expenditure statement call circular to relevant agencies of government indicating guidelines and instructions for strict adherence, compliance, and reporting.
While commending the timing of the workshop, given the foregoing revenue challenge of the country, she stressed that ECOWAS intervention in the area of revamping up tax generation and blocking leakages through Implementation of the PATF in Nigeria was a laudable one.
The Director of the Customs Union and Taxation, Salifou Tiemtore, said the PATF programme would strengthen regional fight against fraud, tax evasion, Illicit Financial Flows and other forms of corruption.
He said the event was the beginning of series of workshops to disseminate the contents of the Tax Expenditure Guide to specific countries notably Nigeria, Liberia, Guinea Bissau and Mauritania.
Tiemtore said the successful implementation of PATF tools would also improve the management of domestic taxation in member states through efficient management of VAT and control of tax expenditures.
He commended the European Union Delegation, for the support and funding while assuring them of the commission’s willingness to continue implementing the programme for the benefit of members state.
Copyright PUNCH.
All rights reserved. This material, and other digital content on this website, may not be reproduced, published, broadcast, rewritten or redistributed in whole or in part without prior express written permission from PUNCH.
Contact: [email protected]
