The Presidential Committee on Fiscal Policy and Tax Reform (PCFPTR), yesterday, said its target is to remove impediments to businesses and trade in Nigeria to facilitate economic growth.
As part of the critical reforms, the Committee also intends to prune over 200 taxes to single-digit rates.
Chairman of the PCFPTR, Taiwo Oyedele, stated this while briefing State House Correspondents, shortly after the committee met with President Bola Tinubu, at the Presidential Villa, Abuja.
Oyedele said: “We will remove those impediments so that people can then gain employment, earn dollars while they are here in Nigeria, which not only helps with our foreign exchange management, but ensures that people also have prosperity to lift themselves and families from poverty.
“And of course, they will pay taxes on the income to the government.”
He explained that the move is in line with the mandate of the committee, which includes growing the economy in the most sustainable way. “When businesses succeed, when individuals prosper, they pay taxes. For us that’s the most fundamental,” he added.
Regarding the multiplicity of taxes, which he described as the second phase of the Committee’s work, Oyedele said: “Those critical reforms involve even rewriting our major tax laws, addressing something that everybody in this room will be very much familiar with multiplicity of taxes.”
According to him, there are over 60 taxes and levies, officially collectable by the Federal, State and Local Governments.
“Unofficially, those taxes are over 200, making life difficult for our people. So, the objective we have, and that’s what we’re working towards, is to bring all of that to a single digit.
“The taxes at all levels of government combined, should be less than 10 because about 96 per cent or more of our revenue across Federal, States and Local Governments, is currently generated from less than 10 taxes.
“And we have seen countries like South Africa generating more than our entire national tax revenues from just one tax.”
He noted that the PCFPTR’s mandate by President Bola Tinubu to help reform the fiscal system and tax administration rests on three pillars.
Oyedele continued: “One is fiscal governance and issues to do with fiscal policy coordination with monetary policy.
“It will highlight issues to do with respect to legal thresholds, and debt to GDP, debt service to revenue ratio, deficits in the budget as a ratio of GDP and many others.
“The second pillar is revenue transformation, which is where we are looking at both non-tax and tax revenues, including how to optimise value from government assets and natural resources.
“Also, it will examine how we will gain more efficiency from government-owned enterprises so that they can yield returns for the Nigerian people.”
“The third deals with economic growth facilitation. The principle behind this is that at the end of the day, we are looking at how to remove impediments to businesses and trade. We will also look at opportunities for young Nigerians, many of whom are very smart and intelligent.
“But today, we have legal and tax impediments that will not allow global organisations to hire Nigerians in Nigeria to work within the global value system.
Unofficially, those taxes are over 200, making life difficult for our people. So, the objective we have, and that’s what we’re working towards, is to bring all of that to a single digit.
Oyede disclosed that the PCFPTR came to formally present its report to Mr President, adding that “once we get the nod from him, it will be like just switching on the tap and then the implementation starts immediately.
“There’s so much work for us to do, this is just Milestone #1, it is what we call the quick wins.”
To achieve this, he said the Committee created six subcommittees. “The subcommittee meets every single day, and for us that’s the sense of urgency in dealing with issues that are affecting our country.
“Because the President was busy outside the country, we did not submit our report exactly when it was ready.
“What we have done since then was to start speaking to the various policymakers, from the Central Bank of Nigeria to the Finance Minister, who is also the Coordinating Minister for the Economy, to the Federal Inland Revenue Service (FIRS) and the Joint Tax Board, and even two state governors.”
He added: “So, now we are at that phase of rewriting our laws. We spent time with the Senate, and we would also do the same thing with the Houses of Assembly.
“The whole idea is we think that some of the reforms we need to introduce have to go to the Constitution itself, there is a lack of clarity about taxing rights between levels of government.
“We’re all familiar with the dispute around VAT (Value Added Tax). We think that the solution will not come from the courts, it will come from Nigerians coming together to say ‘actually, this is the best way to deal with these matters.
“We also spoke to traders, MATAN (Market Traders Association of Nigeria) and they said to us, that people selling pure water in the market collect seven tickets every single day. Why should someone who is just trying to hawk pure water to keep body and soul together have to pay seven taxes on a daily basis? It doesn’t make a lot of sense to us.”
Regarding public input Oyedele said: “We have commenced our public consultation and stakeholder engagement, it’s open until the 15th of November. I’m glad to inform you that after just a few days of opening up that platform for engagement, we have received inputs from every single state in Nigeria and we’re just starting.”