Tinubu’s tax reforms raise concerns about Nigerians’ welfare

AS President Bola Tinubu moves to amend Nigeria’s tax laws and fiscal policy to improve government revenue, analysts want the reforms to adequately address the welfare of the average Nigerian to engender trust.

The analysts, who spoke with The ICIR, said Nigeria’s tax administration had faced many issues arising from multiple taxation, poor administration, tax touting, non-payment of tax refunds, and other complex natures of the tax laws.

Revenues from tax are used to run the cost of governance and build social infrastructures that help to improve the quality of living.

Tinubu had on Thursday, July 6, signed four Executive Orders on tax relief and, the following day, set up a presidential committee on Fiscal Policy and Tax Reforms.

According to a financial analyst, David Adonri, a tax policy should balance all the contending objectives for optimum tax effect on the citizens and businesses.

Adonri explained to The ICIR that taxation as a core fiscal policy does not constitute the only primary source of government revenue, but is also applied as income redistribution to incentivise investment in critical sectors of the economy.

He said the tax administration in Nigeria had been in “disarray” and needed to be reformed and harmonised, and several taxes discouraging investment reversed.

“It is, therefore, a welcome development for President Tinubu to reform tax policy and administration to increase clarity and prevent multiple taxations,” Adonri said.

He added that it was necessary to bring the informal sector into the tax bracket to discourage population explosion, and any tax relief for households should only cover the husband, wife, and two children.

A former president of council, Chartered Institute of Bankers of Nigeria (CIBN), Segun Ajibola, raised issues on tax payers’ misgivings about the application of the taxes they had been paying.

“If I pay tax, what is in it for me?” Ajibola asked.

According to him, if the new administration could practically demonstrate to Nigerians how tax revenues are applied to help their welfare, it would become much easier to widen the tax net.

“So, a lot needs to be done, but the demonstration of effective utilisation of revenue will improve the state of welfare of the masses, encourage businesses and attract new investment into the economy, and that will ultimately encourage more people and businesses to come into the tax net,” the CIBN ex-president said on Friday, July 7 on the Arise Television programme, The Morning Show.

He added that the masses should be able to see the “marginal productivity” of every naira collected.

The head of financial institutions ratings at Agusto and Co, Ayokunle Olubunmi, pointing out that the country had one of the world’s lowest tax collection rates-to-gross domestic product (GDP), told The ICIR that many citizens did not want to pay taxes because of concerns about what the government does with the revenues collected from taxes.

“But we have found ourselves in a dire situation now because of crude oil theft, infrastructure decay, and the likes, as oil revenue is falling.

“The truth is that with all the intent to move into renewables, the oil revenue will fall further. That is why you could see that the government is trying to look into ways to collect more tax revenue,” Olubunmi said.

    This could be why the government has been very aggressive on the tax issue in the last two to three weeks, he asserted.

    He believed one of the reasons the government set up the committee on tax reforms could be because of the criticisms that trailed its proposed levy on the annual renewal of car ownership.

    Olubunmi said, “One of the beauties of paying taxes is that there should be a correlation between the amount of taxes people pay and the accountability in government. So, the more taxes we pay, the more we will be concerned over what the government does with our money.”

    He suggested that the government should develop a tax system that must not necessarily overburden people that have low incomes.

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