Nigeria’s tax revenue to GDP ratio rises to 7%

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The ratio of Nigeria’s tax revenue to its Gross Domestic Product(GDP) has risen from 6 to 7 percent.

This was revealed by the Minister of Finance, Mrs Zainab Ahmed, while speaking on Wednesday at a function in Abuja.

However, she said this figure was still low, challenging revenue generation agencies in the country to brace up and broaden the non-revenue base of government.

Mrs Ahmed, who spoke at the unveiling of federal government’s Strategic Revenue Growth Initiatives (SRGI) for sustainable revenue generation in all sectors of the economy, noted that government plans to achieve “sustainability revenue generation to optimally collect revenues, so we always maintain fiscal buoyancy and resilience.”

She said thereafter, government will identify new revenue streams and enhance the enforcement with regards to revenue collection on our existing revenue streams.

According, when the above is achieved, another move would be to create a “cohesion between revenue generating entities and equipping them with cutting-edge tools and expertise needed to support high performance, so we can turnaround our current performance on revenue outturn to meet revenue targets that we are charged with.”

“The revenue initiatives have been broken into clear implementable portfolios for each relevant MDA and I believe that these are well thought out initiatives targeted at improving our tax base and collections, ensuring we have big data to work with, deploy a single trade platform, among many others,” Mrs Ahmed said.

She further that, “We have faced difficulty in mobilising domestic funds necessary for human capital development and infrastructure that are both drivers of sustainable economic growth.

“Our current revenue to GDP ratio of about seven percent is unsatisfactory and we are keen on exerting all efforts in turning this around.

“The case remains the same with our current contribution between oil and non-oil revenues to oil and non-oil GDP, for which our analysis on oil revenue to oil GDP reveals as 39 percent while non-oil revenue to non-oil GDP as 4.2 percent.

“Our VAT revenue to GDP in Nigeria for example stands at 0.8 percent, which compares unfavourably to the ECOWAS average of 3.4 percent. So also, is our excise revenue which is 4.1 percent, compared to Ghana at 15 percent or Kenya at 19.5 percent.”

Last year, Executive Secretary of the Federal Inland Revenue Service (FIRS), Mr Babatunde Fowler, had said his agency would make efforts to increase the national tax revenue to GDP ratio to at least 20 percent by December 31, 2018.

However, with the latest information by his boss, the Finance Minister, this target was never met by the tax agency.

“Revenue authorities nationwide should ensure that all efforts are made to increase the national tax revenue to the Gross Domestic Product ratio to at least 20 percent by December 31, 2018,” FIRS had said in a communiqué issued last September.

Business Post reports that some Nigerians still find it difficult to pay tax to government because of issue of transparency on the part of government. Citizens provide virtually every basis things for themselves, including water, electricity, shelter, food, sometimes roads and others.

Though the number of people in the tax net is increasing by the day, a lot of taxpayers still have to be captured by government. At the moment, the tax base is nearly 20 million in a population of nearly 200 million.

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