Business Journal

Taxation

Presidential Fiscal Policy Committee Proposes 8 Single Digit Taxes

Mr. Taiwo Oyedele

Chairman

The Presidential Fiscal Policy and Tax Reforms Committee

The Presidential Fiscal Policy and Tax Reforms Committee has proposed eight single digit taxes in Nigeria as against the estimated 200 taxes existing within the three-tiers of government (federal, states and local governments).

Mr. Taiwo Oyedele, the Chairman of the Committee said at a workshop for journalists in Lagos that the proposal on the eight taxes (Income Tax, Value Added Tax (VAT), Property Tax, Customs Duties, Excise Tax, Stamp Duties, Special Levy and Harmonised Levy) will form part of the draft national fiscal policy for the country.

Oyedele added that the committee has equally recommended suspension of Value Added Tax (VAT) on diesel to reduce financial burden on the productive sector, tax waivers on CNG vehicles and promotion of export of goods, services and intellectual property amongst others.

“There are over 200 taxes across the three tiers of government in Nigeria. We strongly propose single-digit taxation because the poorest people and small businesses carry the burden of taxation in Nigeria.”

He suggested that 95 percent of operators in the informal sector should also be exempted from any form of taxation given that the informal sector constitutes the bulk of socio-economic activities in any economy and secondly, to empower them to grow sustainably.

On the outcome the committee expects at the end of its exercise in terms of tax reform, Oyedele listed five expectations:

  • Collect Better
  • Budget Better
  • Spend Better
  • Manage Better
  • Report Better

He said the issue of taxation in the country is a difficult terrain because only 31 percent of businesses consider tax evasion as wrong while only 17 percent of individuals believe they should pay tax and does not see anything wrong on the issue of tax evasion.

And while businesses complain of multiplicity of taxes and high frequency of tax audit, individuals blame lack of trust in government and tax officials, as well as complex tax process as reasons for their apathy towards payment of tax.

The committee chairman listed the three pillars of its mandate as fiscal governance (modern, simple and adaptive), revenue transformation (growth enabling and competitive) and economic growth and competitiveness (no taxing of investment, capital, production, poverty or seed).

Oyedele listed the current socio-economic realities in the country as slow economic growth, high inflation, widespread poverty, declining investment, low revenue, high public debt and rapid increase in the rate of emigration.

He however, stated that the positive indicators include balance of trade/current account surplus, rising crude oil production and pricing, commencement of local crude oil refining, capital market performance, declining budget deficit by the federal government and States and positive outlook reports by rating agencies.

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