Gauging a nation’s tax revenue with the size of the economy as measured by the Gross Domestic Product is critical to determining growth and keeping such a country on track especially when it comes to measuring successes in its tax administration.
It is in the light of the above that the Federal Inland Revenue Services, FIRS has brought to the limelight the need to integrate all revenue generated at the national and sub-national levels in a bid to determine accurately Nigeria’s tax-to-GDP ratio.
The FIRS through its Executive Chairman, Muhammad Nami revealed this position recently with further analysis on the need to ensure that all government revenue is included in the fiscal accounts and annual statistics.
To ensure this, the FIRS must through the Ministry of Finance, Budget, and National Planning see that government revenue is included in the accounting for taxes generated, including amounts invested by taxpayers in the country’s road infrastructure as a result of Executive Order 007, tax waivers granted to pioneer companies, import and exercise duties waived through the operations of the Nigeria Customs and all other revenues generated by MDAs on behalf of the Federal, State and Local governments in Nigeria.
The above measures according to the tax administrator when implemented, will align Nigeria with global best practices in reporting public finance and will ensure a more transparent and more accurate picture of the country’s Tax-to-GDP ratio.
What Nami is saying about GDP integration,
“One of the recurring issues in national discourse has been Nigeria’s low tax-to-GDP ratio,” Nami said.
“In as much as the country needs to continually and conscientiously put measures in place to improve such a concern, there is also the need to comprehensively bring all the national and sub-national revenue sources into consideration to properly and appropriately determine the correct and meaningful tax-to-GDP ratio for the country.
“The current basis for its computation, which mostly focuses on the taxes administered at the federal level and leaving out other sources of revenue being generated by the Federal, States, and Local governments and their MDAs, does not truly reflect its correct standing.” He stated.
“The essence of this symposium cannot be overemphasized given the challenges being experienced globally due to the COVID-19 pandemic. With the mutations and vaccine-resistant variants being discovered now and then in some countries, we are yet to be free as the social and economic variables are still unpredictable. Therefore, the theme of this symposium is very timely and relevant as it considers policy options for addressing current and future challenges.
“It will also review the challenges of the informal sector which constitutes about 70% of businesses in Nigeria and the reform options available to bring them into the tax net.”