Amaechi Ogbonna and Juliana Taiwo Obalonye, Washington DC

The Federal Government yesterday said it has forwarded a set of tax reform bills for passage by the National Assembly ahead of the implementation of its proposed Value Added Tax (VAT) increase from 5 per cent to 7.5 per cent next year.

Minister of Finance, Mrs Zainab Ahmed, who dropped the hint at a session with the Director of Africa Department, International Monetary Fund (IMF), Aemro Abebe Selassie, on the sidelines of the annual meetings of the IMF and the World Bank in Washington DC, said the Federal Government intends to deploy blockchain technology to help the Nigeria Customs Service (NCS) and other revenue agencies improve their revenue collection to fund its 2020, N10.3trillion budget.

She explained that most of the country’s tax laws have become so deficient and certainly no more sustainable under the current dispensation where government is looking forward to reducing dependence on oil revenue and rely more on taxes to fund its key infrastructure and budgetary needs.

The Minister said: “Nigeria is lagging behind other countries in its categories in the area of tax revenue collection. So we need to develop incentives in the fiscal space to improve on the status quo. Inadequacy of our tax collection, VAT, Excise Duty and leakages in our tax administration would not allow us meet our infrastructure masterplan which requires that we invest at least $2trillion over the next 30 years in order to stimulate more economic growth. We are also planning to increase excise duty on carbonated drinks while reducing tax rates on Small and Medium Enterprises(SMES).

“On Customs revenue, we intend to adopt blockchain technology to improve revenue collection as we plan to use the VAT increase to funds health, education and infrastructure “

According to her, countries all over the world have used taxes to develop infrastructure but this strategy has not worked in Nigeria due to low tax morale of Nigerians, outdated tax laws and financial leakages due to human intervention in tax administration.

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The Minister said “Nigeria customs service is implementing a project called e-collections and  automating almost all of its functions, aimed at removing any need to collect cash which creates opportunity for abuse.

“In addition to the collections system they have developed, we are adopting the blockchain technology whereby we are able to see real time how much is being collected on daily basis. That will help us to keep track of what is being collected and what the banks are remitting from the collections on a daily basis.

“As an agency of government set up by law, they can use technology to improve their performance anytime. You don’t need a new law to do that.”

She added that the technology would apply to all revenue generating agencies of the Federal Government including the FIRS.

The minister said government was developing a new communications strategy to convince Nigerians on the need to pay their taxes promptly to raise the tax- to -GDP to about 15 per centfrom the current low of about 7 per cent.

She also said the government plans to impose higher excise duty on carbonated drinks among others to raise more funds to finance the 2020 budget.