Abuja Chamber commends new tax administration in FCT
The Abuja Chamber of Commerce and Industry (ACCI) said the plans by the of Federal Capital Territory Administration to harmonise tax policy within the territory to ease the burden of multiple taxations on SMEs is a welcome development.
In a statement, the ACCI said it appreciates the acknowledgment of the challenges faced by businesses within the territory due to series of levies, charges and taxes from Federal, FCTA and Area Council Administration.
“Multiple taxation within the FCT and the larger national economy has imposed crippling consequences on businesses.
“The fallout has been many failed businesses, rising level of inflation, the non-thriving of existing ones and the lack of capacity to engage many unemployed youth,” the Chamber said in the statement.
It said that lower taxes when also harmonised enhance prosperity of the economy.
According to the Chamber, as an SME nation, expanding the base and health of the business sector is a smart choice to exit recession and adjust to the pandemic economic disruption.
“It is thus gratifying to note that FCTA is taking the lead to ease the tax burden on SMEs. Such an action will have multiplier effect on the FCT economy, leading to more job creation and reduction of poverty rate.
“The path of lower taxation to speed up the growth of the economy is a tested tool that has helped many economies. Japan, Taiwan, South Korea, Singapore, old Hong Kong, Russia, Australia, and Israel are some of the non-western countries that have, in the last 100 years, managed to move their countries from “developing” to “developed” economies through a combination of lower tax rate and high tax base.
“The Abuja Chamber of Commerce and Industry is of the view that governments at all level should focus on increasing the tax base rather than the tax rate.
“According to official data, As a percentage of GDP, Nigeria taxes represent 6.1 percent, one of the lowest in the world. The tax-to-GDP ratio in South Africa was 29 percent, Ghana 18 percent, Egypt 15 percent and Kenya 18 percent, says the OECD in a 2019 report.
“More businesses and citizens should be brought under the tax regime albeit with reduced and well harmonised rates that is devoid of multiple taxation,” the ACCI stated.
We want to note that the tax policy reform being contemplated by the FCT administration is of direct significance and interest to us at the ACCI. Our members are negatively impacted by multiple taxation. The economy of the Territory is also stunted by this crippling tax regime. It is therefore our pleasure to identify and work with the FCTA to accomplish these noble objectives.