Expert: Naira Redesign, Cashless Policy to Increase Nigeria’s Tax Bracket
Nume Ekeghe
The Head, of Global Markets at Parthian Partners, Ronke Akinyemi has stated that the naira redesign policy, which has prompted an increase in digital banking would enhance tax inclusion and efficiency in NIgeria.
She said this while speaking at the bi-monthly forum of the Finance Correspondents Association of Nigeria (FICAN) in Lagos.
She noted that the naira redesign coupled with the cashless policy of the Central Bank of Nigeria (CBN) is expected to see more naira move from private hands into the banking vaults.
She said: “We expect that there will be increased remittances from government-owned enterprises, we expect to see improved tax administration. We expect that if we eventually transition to a cashless economy, more money is in the bank, the banks would have an idea of who owns what and it will be easier for the tax guys to go after those who have not been paying tax on who has been evading tax because you cannot collect tax from the person that is putting money under his bed. So once all the money is in one place, it creates a clearer view for them. So, in that respect, we expect that there will be improved tax administration and increased oil outputs, hopefully.”
The governor of the CBN, Mr. Godwin Emefiele had in a press conference in Lagos recently also alluded to the cashless policy enhancing tax collections.
He said: “In addition, the short-term decline in cash holding and the increased formalization of business activities as the cashless policy forces more economic agents to open bank accounts, will also boost fiscal policy. With more transactions going through e-channels and bank accounts, more agents come within view of the government’s tax net. This enlarges the base of taxable activities and increases the possibility of more tax receipts by various tiers of government.
“In the long-term, the policy improves the sophistication of tax collection and would no doubt reduce tax evasion and tax avoidance. As experiences from other jurisdictions have shown, effective currency redesign can support regulatory reform, increased legislative reach and coordinated fiscal and structural policies.
“The advantages of the currency redesign is overwhelmingly enormous and will benefit the economy in the long-run. We will take all the necessary steps to ensure that there will be a smooth flow of currency swaps and minimise the inconvenience in the short-term,” he said.
