Business - Business & Economy - News - October 9, 2021

Why Nigeria must do more to grow her tax revenue, FIRS Chairman

Says Nigeria, with 200 million population and 41 million tax payers pay less than N1trillion in personal income tax in 2020, compared with South Africa, with a population of 60 million people, and 4 million taxpayers paying N13 trillion in personal income tax.

By Bassey Udo

With over 200 million population, Nigeria’s tax base is made up of only about 41 million people paying less than N1trillion as personal income tax last year, the Chairman of the Federal Inland Revenue Service, Muhammad Nami, has said.

Nami spoke on Friday in Abuja at the ‘Public Presentation and Breakdown of the Highlights of the 2022 Appropriation Bill’ presented by President Muhammadu Buhari to the joint session of the National Assembly on Thursday.

The N16.39trillion 2022 budget proposal titled, ‘Budget of Economic Growth and Sustainability’ would be the last budget to be fully implemented by the Buhari administration billed to exit office by May 2023.

Nami said the figures were far below comparisons with what are contained in contemporary economies in Saudi Arabia and South Africa.

Compared to Saudi Arabia, an oil-producing country like Nigeria, with a population of about 35 million people, Nami said is not there, although we continue to assume we are a rich country”

In terms of the rate of taxes paid in Saudi Arabia, the FIRS Chairman said the VAT rate is as high as 15 percent, compared to Nigeria, which is just 7.5 percent

Besides, the performance of the Nigerian National Petroleum Corporation (NNPC) in terms of tax payment cannot be compared to Saudi Arabia’s Aramco, its contemporary, which recorded over $52 billion profit last year.

Again, compared with South Africa, Nami said with a total population of about 60 million people, with just 4 million people in its tax base, the country’s total personal income tax payment figure last year was about N13 trillion.

“So, we can now see that these figures do not add up. Nigeria does not have that money as a country. We don’t even have a budget of the size of Saudi Arabia and South Africa, not to talk of even competing with them,

“So, we need to do more. We have to make more sacrifices for the country. And the only way we can do it is through the payment of taxes, particularly direct taxes. If we don’t pay these taxes there is no way the government will be able to provide social amenities, critical infrastructures that citizens will use,” Nami said.

The FIRS Chairman, who lamented the current revenue crunch of the country and how the government has been struggling to finance the budgets over the years, said the population of billionaires in Nigeria cannot be compared to those in South Africa.

“The number of billionaires in Lagos alone is more than the number of billionaires in the whole of South Africa. Yet, what we generated as Personal Income Tax by Lagos State Government was just less than N400billion,” he said.

The FIRS Chairman has been criticized by a cross-section of Nigerians for not referencing the number of billionaires in Kano and other States in the northern part of the country usually identified with large populations during elections without contributing as much to the economy, in terms of payment of tax.

Nami said although the total tax collection as of September 30, which are yet to fully reconcile with Central Bank of Nigeria (CBN) and other revenue collection agencies’ data, was about N4.2 trillion, oil-related tax collection accounted for only 22 percent, or about N950 billion, while non-oil taxes was about N3.3 trillion.

He attributed this to the increasing attempt of the revenue collection service and the government to diversify the economy, from a tax perspective.

He noted that the taxes being paid in the country were grossly inadequate to what the government wants to use them to implement, blaming the situation on Nigerians not willing to exercise their civic responsibility of paying tax.

“Even when people are appointed as tax collection agents, whatever they have collected on behalf of the government, they find it difficult to remit to the treasury,” he said.

During the presentation of the details of the budget, the Minister of Finance, Budget and National Planning, Zainab Ahmed, said of the total N10.13 trillion projected aggregate revenue available to fund the 2022 fiscal appropriation, inclusive of revenues from government-owned enterprises (GOEs), 34.9 percent would come from oil-related
sources against 65.1 percent from non-oil sources.

Details of the N3.15trillion share of oil revenues, the minister said, would include N187.4 billion as dividend payment from the Nigeria LNG and N8.32billion from the Bank of Industry, while revenues from minerals and mining would be N2.92billion.

In terms of non-oil tax revenues, the minister said the highlights from the overview of the revenue framework showed a total of N2.13trillion is being expected by the government during the year.

A breakdown consists of N909.3billion from company income tax (CIT), N316.69 billion from the value-added tax (VAT), N834.12 billion from the Nigeria Customs Service, N71.97billion, N29.37billion from electronic money transfer levy (formerly Stamp Duty), and N9694billion from oil royalty.

Other revenue sources include N2.88trillion from government-owned enterprises, N1.82trillion from independent sources, N300billion from drawdown from special levies accounts, N280.86billion, N26.93billion, N63.38billion from grants and donor funding, and N305.998billion from tertiary education tax fund (TETFUND).

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