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FG, states commence taxes harmonization

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By Abdulwasiu Usman

Gov't plans to curtail existing multitude of taxes, fortify the tax system.

The federal and state governments have initiated the process of harmonizing and reforming taxes across both the national and sub-national level in an effort to curb double taxation and bolster fiscal inflow. As a fist step, President Bola Tinubu has inaugurated the Presidential Committee on Fiscal Policy and Tax Reform. Speaking at the 153rd board meeting in Abuja, the Chairman of the Joint Tax Board (JTB) , Muhammad Nami, expressed utmost dedication towards the ongoing harmonization initiative. He emphasized the board’s commitment to avoiding any prior pitfalls, particularly as the current administration shows unwavering determination to eliminate the proliferation of taxes.

Business owners have consistently expressed discontent regarding the onerous burden of multiple taxes being imposed upon them, which regrettably adversely affects their commercial operations. Despite this, it is noteworthy to mention that Nigeria’s tax-to-GDP ratio stands at a mere 10.8%, a figure that places it among the lowest globally. Nami, who also holds the position of executive chairman of the Federal Inland Revenue Services, has expressed the government’s intention to curtail the existing multitude of taxes, fortify the tax system against any potential breaches, and augment the revenue streams for the three tiers of government.

Harmonizing tax collection and ensuring simple payment procedure.

Nami stated that the government needs to adopt tough but essential reforms in order to maximize tax revenue collection at the federal, state, and local levels. He explained that one of the main goals of the meeting, tagged “Harmonization and Codification of taxes at the National and Sub-national levels,” was to adopt new methods for optimizing tax revenue for all levels of government in order to create a tax administration that was more efficient, effective, inclusive, and sustainable. This would help to create a tax-friendly environment in Nigeria.

In addition, the chairman revealed plans to expand tax collection efforts into the informal economy. Working in collaboration with informal labour unions, the government would ensure that taxation is not applied to goods and services that are not subjected to it. According to Obomeghie Nana-Aisha, executive secretary of the Joint Tax Board, the government will harmonize tax collection to make tax payment a simple procedure, as she lamented the proliferation of tax collectors whose payments of illegal taxes often don’t go to the government. She also assured the people that the government will be transparent and forthright by disclosing tax obligations.

Complex tax system reduce businesses’ investment returns.

Also speaking on the subject, Oyedele argued that the solution to Nigeria’s tax income problem is not to impose more levies and taxes, but rather to concentrate on the few that are highly profitable, simple to manage, and difficult to evade. Oyedele cautioned that Nigeria may inevitably reach a juncture wherein the cumulative tax burden would completely surpass the total earnings of businesses. Such a disconcerting scenario, he posits, would undoubtedly put-off prospective investments, while noting that there are roughly 44 distinct proposals before the National Assembly with provisions on levies and taxes.

He outlined a number of issues plaguing Nigeria’s tax system adding to the initial business risks such as the country’s overabundance of taxes and tax collection agencies; the country’s largely disjointed, rudimentary, and complex tax system; low revenue as a result of low tax morale and widespread tax evasion; and the country’s high cost of revenue administration and compliance. As a result, he said, businesses’ investment returns are reduced, working capital is depleted, and may even lead to the demise of the business.

Nigeria only generated N15.1 billion in taxes in 2022.

Chairman of the Presidential Tax Reform Committee Taiwo Oyedele lamented that despite having a far larger economy and population than South Africa, Nigeria only generated N15.1 billion in taxes in 2022. Whereas South Africa generates N78.2 billion. He argued that the main focus should be on maximizing personal income tax, which is the most significant revenue generator for most governments, and turns out to be the most underutilized in Nigeria. Oyedele also suggested that the country implement a single-digit tax rate across all levels of government, simplify the process of complying with tax laws, and clarify taxpayer rights.

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3 months ago

FG, states commence taxes harmonization.Gov’t plans to curtail existing multitude of taxes, fortify the tax system. – Express your point of view. 

Last edited 3 months ago by Kenny Adetunji
3 months ago

I think it’s a positive step for the government and states to begin the process of tax harmonization. By consolidating and streamlining the existing multitude of taxes, it can bring about several benefits. First, it can simplify the tax system, making it easier for individuals and businesses to understand and comply with their tax obligations. This can reduce the administrative burden and costs associated with tax compliance.
Furthermore, a harmonized tax system can promote fairness and equity. It can help ensure that everyone is contributing their fair share based on their income and economic activities. This can help alleviate the burden on certain sectors or regions that may have been disproportionately affected by multiple taxes.
In addition, a fortified tax system can enhance revenue collection for the government. By reducing tax evasion and increasing compliance, it can provide a stable and predictable source of revenue. This can enable the government to fund essential public services, infrastructure development, and social welfare programs.
However, it’s important for the government to carefully consider the potential impacts of tax harmonization. They should ensure that any changes are implemented in a gradual and well-planned manner to minimize disruptions to businesses and individuals. It’s also crucial to strike a balance between simplification and maintaining necessary tax incentives that encourage investment and economic growth.
Overall, I believe that tax harmonization, coupled with efforts to curtail the existing multitude of taxes and fortify the tax system, can be a positive move towards a more efficient, fair, and sustainable tax regime.

3 months ago

The government’s start of tax harmonization is a step toward improving the tax policy it’s critical to address worries about budgetary liberty and make sure everyone engaged gains.

3 months ago

Striking a balance between tax incentives that promote investment and economic growth and necessary simplicity is also essential.the start of tax harmonization by the federal government and the states. To comprehend and fulfill one’s tax obligations, both personally and professionally