Nigeria’s task of growing tax revenue and improving overall tax collection must be pursued with a human face and sustainability in focus, Minister of Finance, Kemi Adeosun, has said.
The Minister, who was speaking at the inauguration of the Committee on the Review of the National Tax Policy Document in Abuja on Wednesday, said government was determined to ensure that the country’s taxes were simplified, while the relevant unit in the Ministry would be strengthened to play a more vibrant role in tax policy formulation.
She said the review of the tax policy was to entrench a system that would help effectively harness needed resources for sustainable economic growth and development of the country.
“This administration is committed to diversifying the sources of government revenues away from oil,” Mrs. Adeosun said.
“Oil is just 13 per cent of our economy but accounts for 70 per cent of government revenue. Our challenge is to ensure that the other 87 per cent of economic activity makes its own contribution to government revenue. An effective tax system is key to this and such a system must be underpinned by an effective and appropriate tax policy,” she said.
Nigeria, she noted, has one of the lowest tax to GDP (gross domestic products) ratios in the world at just 5 per cent, adding that there was clearly a pressing need for an overhaul of the country’s tax policy to enable the Ministry meet one of its key functions.
Considering that businesses react to tax policies, Mrs. Adeosun said government was determined to ensure that such policies send the right message to Nigerians that the tax system was easy to understand and comply with.
She assured that the country’s tax code and laws that require review would be addressed as part of the exercise, with modalities for simplifying the processes and reducing the tax burden on small businesses.
The introduction of the National Tax Policy in 2012, the Minister said, spelt out a set of fundamental principles to determine required areas of legislative and administrative action in the tax system.
She said since the document was finalised over four years ago and was yet to be fully implemented, it became necessary that it was reviewed, in view of the rapidly changing commercial environment and new business models, to curb tax avoidance and evasion.
Before inaugurating the review committee, she said its terms of reference included comprehensive review of the National Tax Policy document’s recommendation of a list of tax.