Nigeria, grappling with low revenue collection, has been burdened by a multitude of formal and informal taxes, while some individuals and businesses underpay or evade taxes altogether, exacerbating the country’s fiscal challenges.
The chairman of the presidential committee on tax reforms, Taiwo Oyedele said this in a Twitter post on Tuesday.
According to him, at the core of the problem lies a broken social contract, leading to a poor tax culture and low tax morale among citizens, noting that the complexity of the tax system, coupled with inadequate accountability for revenue utilization, further compounds the issue.
He said addressing the tax compliance gap is crucial in restoring the social contract. He said the adoption of technology for tax intelligence can help combat evasion effectively.
The former senior tax specialist at the PwC, noted that exempting the vulnerable from taxes while identifying those eligible for conditional cash transfers can be achieved through a well-designed exemption threshold.
He stated that curbing tax evasion is not just about boosting government revenue; it is about ensuring fairness and equity in society. When some entities evade taxes, law-abiding citizens and businesses can be left at a disadvantage, affecting their competitiveness and sustainability.
“Imagine being in a business and you pay your taxes correctly but your competitor doesn’t hence making you uncompetitive and may eventually price you out of the business. So, addressing tax evasion is critical for a fair and just society,” Oyedele stated.
To improve revenue collection, he stated that the government needs to focus on enhancing collection efficiency, simplifying compliance procedures, and ensuring better policy coordination. Providing adequate fiscal exchange for taxes paid is essential, with particular attention to addressing multidimensional poverty.
Government agencies and public officers should lead by example, demonstrating compliance, transparency, and accountability in tax matters.
Addressing wasteful spending, unproductive tax waivers, contract inflation, and informal taxes levied by non-state actors are also vital steps in the pursuit of a more efficient revenue system. Harmonizing multiple taxes and streamlining revenue collection agencies can further enhance revenue generation.
As the country grapples with rising prices following the removal of petrol subsidies, the government needs to exercise prudence in taxation and consider measures that alleviate the impact on citizens. Suspending recent VAT imposition on diesel could be one such step to cushion the effects of increased prices.
A comprehensive and well-coordinated effort to address revenue challenges is crucial for Nigeria’s economic stability and social welfare.
(Edited by Oludare Mayowa; firstname.lastname@example.org; Newsroom: +234 8033 964 138)