Tax administration and the system of taxation in Nigeria was once again brought to the fore when President Muhammadu Buhari on Tuesday reiterated the federal government’s resolve to continue to sensitise and encourage Nigerians to cultivate the culture of paying taxes by ensuring fair policy implementation and effective utilisation of resources. The Special Adviser to the President on Media and Publicity, Mr Femi Adesina, said Buhari stated this when he received the leadership of the Chartered Institute of Taxation of Nigeria (CITN) at the State House, Abuja on Tuesday.
The president revealed that the National Tax Policy document had been reviewed with the aim of institutionalising a tax payment culture within the Nigerian workforce. Buhari said the progress made in diversifying the economy, providing social security and securing the country could be further improved with enhanced and expanded revenue base. “We have made some progress in the past four years. However, a lot more can still be done. A key step is to enhance and expand government’s revenue base. Today, we still rely on oil as our main source of income. This simply is not enough to meet our infrastructure, social services and security needs,” he said. While describing Nigerians as hardworking and entrepreneurial, the president said a deeper understanding of the effectiveness of tax on the economy by the populace and fair administration would help in improving government’s revenue shortfalls. In his remarks, the President of CITN, ChiefCyril Ede, congratulated the president for winning his second term in office, and assured him of the institute’s support for a successful tenure, especially in the area of using tax to improve government’s revenue. “Your victory is a clear sign of belief, trust and confidence that Nigerians have in you,” he said. Ede said some higher institutions in the country had started offering taxation as a course, hoping it will also be taught in secondary schools. According to him, nations can only achieve development with mobilization of resources through taxation. The president of CITN said: “Political leaders must set a good example for compliance on tax payment by ensuring that presentation of tax certificates remain one of the central requirements for those who want to contest elective positions.” President Buhari’s remark tends to reignite the debate on the need to review the nation’s tax policy as well as diversification of the economy, which is long overdue. This assertion is particularly relevant owing to the fact that the statement is coming on the heels of media report that the federal government is proposing to raise the Value Added Tax (VAT) from five percent to 50 percent to, among other things, enable it meet obligations to workers following the recent approval of increase in national minimum wage from N18,000 to N30,000. Although the issue of taxation in Nigeria is still a thorny one, remarkably the Federal Inland Revenue Service (FIRS) recorded an all-time high tax revenue collection of N5.23 trillion in 2018, given that it was achieved at a period when oil prices averaged $70 per barrel. VAT stood at N1.11 trillion for the first time. Prior to 2018, the highest revenue figure ever attained by FIRS was N5.07 trillion, in 2012, when oil price hovered around $100-$120 per barrel. Besides, the FIRS will be expanding its dragnet and tightening noose against tax evaders, having been given an N8 trillion target this year. The Chairman of FIRS, Dr. Babatunde Fowler, had during the 2019 Management and Stakeholders Retreat, in Lagos, recently reiterated the need for increased compliance to tax laws, adding that there would not be any serious discussion on diversification of the economy without reviewing the country’s tax regime for optimal performance. The Chairman, House of Representatives Committee on Finance, Babangida Ibrahim, while commending the FIRS on the feat achieved, pledged the lawmakers’ support for every initiative that would lead to efficient tax system in the country. “The taxation of any economy and growth of policies of government depends largely on the revenue generated by the tax authorities. We agree that to achieve effective taxation, the support of the parliament cannot be over-emphasised,” he said. At the retreat with the theme: “Parliamentary Support for Effective Taxation of the Digital Economy,” Fowler said FIRS has adopted initiatives that ensure a robust tax administration that is agile and beneficial to all stakeholders. According to him, with the deployment of various digital innovations, cost of collections in non-oil sector has improved from four per cent per N85.99 billion and N100.3 billion in 2016 and 2017 respectively, to N114.1 billion in 2018. It is our view, however, that the Nigeria tax system cannot operate effectively and efficiently except such burning issues as tax evasion and avoidance are reduced to the barest minimum while several others are also adequately addressed. While tax reforms in consonance with global best practices are inevitable, it is high time the federal government lived up to its billing to diversify the nation’s economy from its overdependence on the dwindling crude oil revenue. This will go a long way to address the contentious and contemporary issues at boosting the revenue earning capacity of government.