Oyedele: Despite Multiplicity of Taxes, Revenues Much Lower, 96% Used for Debt Service

James Emejo in Abuja

The Chairman, Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, has said in spite of the multiplicity of taxes, Nigeria’s tax-to GDP ratio remained one of the lowest in Africa.

He said notwithstanding the recent review of the tax to GDP to about 10.8 per cent – “that’s still much lower than it needs to be despite the so many taxes that we collect.”

Speaking at the opening of the 153rd meeting of the Joint Tax Board (JTB) with the theme: “Harmonization and Codification of Taxes at the National and Sub-national levels: Key to Achieving a Tax Friendly Environment in Nigeria,” Oyedele also revealed that the country was spending about 96 per cent of its revenues to service debts.

He said, “We know that Nigeria’s tax to GDP ratio is one of the lowest for Africa even with the recent revision to about 10.8 per cent – that’s still much lower than it needs to be despite having so many taxes that we collect.

“And because we do not collect enough revenues to fund social services, infrastructure and take care of our country, we have to resort to very significant borrowing so much so that at some points at the federal level, we were spending almost 96 per cent just to service debts.  Of course, you can agree with me that there’s no way a country can develop with that kind of revenue and debt profile.”

He said though some progress had been recorded over the years in tax administration, “that progress hasn’t been enough, which means more work needs to be done.”

Oyedele identified multiplicity of taxes as well as a multiplicity of revenue collection agencies as the key challenges facing the country’s tax system.

He said the tax system is largely fragmented with a lack of proper coordination at both the federal and state levels.

He said despite low revenues, the country has one of the highest costs of revenue collection in the world, noting that the global benchmark remains 1 per cent.

According to him, “Many countries that collect 10 times more than what we collect are not even spending up to one per cent. For Nigeria, it is unbelievably high, this goes to show that we have a lot of work to do.”

He said transforming the country’s tax system would require administrative interventions, constitutional amendments/legal changes, use of technology, vertical and horizontal coordination as well as a revisit of the concept of fiscal federalism.

He also said the country should ultimately aim towards single-digit taxes, clarity of taxing rights, integration of tax

collection functions, harmonisation of revenue administration, and simplified approach to tax compliance.