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FIRS faults 6% tax-to-GDP figure, says number excludes states, LGs’ contributions

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EXECUTIVE Chairman of the Federal Inland Revenue Service (FIRS) Muhammad Nami has faulted the six per cent figure allotted to Nigeria’s tax-to-GDP ratio, saying that it excludes the contributions of states and local governments in the country.

Nami harped on the need to include all revenue generated at the national and sub-national levels in order to properly determine the accurate computation of Nigeria’s tax-to-GDP ratio.

The executive chairman said this in his welcome remarks at the ‘National Symposium On Taxation And Challenges Of External Shocks: Lessons and Policy Options for Nigeria,’ on Monday, organised by the FIRS in collaboration with the Usmanu Danfodiyo University, Sokoto (UDUS) in Abuja.

“One of the recurring issues in national discourse has been Nigeria’s low tax-to-GDP ratio,” Nami said in a statement issued by his Special Assistant on Media and Communications Johannes Oluwatobi Wojuola

“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,” he said.

He stressed that the current basis for its computation, which mostly focused on the same 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, did not truly reflect the correct tax-to-GDP standing

He emphasised that doing proper computation was important in order to give the correct state of government revenue and ensure that all government revenue was included in the fiscal accounts and annual statistics.

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He noted that the FIRS would, through the Ministry of Finance, Budget and National Planning, ensure that all government revenue was 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.

Nami also highlighted that the above measures, when implemented, would align Nigeria with global best practices in reporting public finance and ensure a more transparent and accurate picture of the country’s tax-to-GDP ratio.

Speaking further, the FIRS executive chairman stated the importance of the symposium against the continued challenge posed by COVID-19 pandemic, where new strands of the virus had been discovered and were posing threats to business and commercial activities worldwide.

“The essence of this symposium cannot be overemphasised given the challenges being experienced globally due to the Covid-19 pandemic. With the mutations and vaccine resistant variants being discovered every 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 per cent of businesses in Nigeria and the reform options available to bring them into the tax net.”

The symposium also afforded the FIRS the opportunity to launch its digital contact centre, an initiative to foster better communication with taxpayers.

“Today’s event is significant because we are also using the opportunity to formally launch the FIRS contact centre. The decision to hold both events today is strategically intended to walk the talk.

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“By launching the contact centre at this symposium, we are showing our commitment to not only hold talks on policy options in enhancing tax administration but also putting in place structures to actualize one of our key policy thrusts.”

This development, he said, would enable the commission to build a customer-centric FIRS through effective and efficient taxpayer service.

 

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