As part of a strategy to eradicate the issue of multiple taxation, the Presidential Committee on Fiscal Policy and Tax Reforms has suggested the discontinuation of 190 taxes that have been burdensome for businesses across the nation.
During a brief ceremony at the Presidential Villa in Abuja on Tuesday, the panel presented its ‘Quick Win Report’ to President Bola Tinubu, who endorsed the comprehensive recommendations on tax and fiscal policies.
The Organised Private Sector, which backed the proposal of the committees blamed states for multiple taxation in the country.
The OPS lamented that multiple taxes had compounded the rising production costs, leading to reduced profit margins, supply chain disruptions, and a reduction in consumer spending.
Specifically, the telecommunication operators complained that the sector was one of the most taxed in the country with over 40 taxes directed at telecom firms.
Gbolahan Awonuga, the Head of Operations for the Association of Licensed Telecoms Operators of Nigeria, attributed the issue of multiple taxes to state governments.
In response to the challenging business environment, the President initiated fiscal policy and tax reforms in August, with the aim of enhancing the country’s revenue generation and business climate.
Mr. Taiwo Oyedele, the Chairman of the committee, presented a report to the President, proposing the consolidation of more than 200 taxes paid by Nigerian businesses into just 10.
Among other requests, Oyedele urged the President to pass an emergency economic intervention bill (Executive Bill) and issue Presidential Executive Orders to address overlapping functions in the public service and ensure prudent management of public finances to maximize the value of government assets and natural resources.
In response to the committee’s presentation, the President expressed his appreciation for their work and assured them of his support in reviewing and implementing key recommendations.
“I have carefully listened to your report. Charting the critical path forward for Nigeria’s economic recovery is essential to all of us. I want to express my gratitude to your delegation,” he stated.
Tinubu granted the committee’s request to address a Federal Executive Council meeting and update cabinet members on their work and the anticipated outcomes to promote economic growth.
A statement by the Special Adviser to the President on Media and Publicity, Ajuri Ngelale, disclosed that the President directed his Special Adviser on Policy Coordination, Ms. Hadiza Bala Usman, to coordinate with the relevant government officials for the session.
FIRS pledges implementation
In his remarks, the acting Chairman of the Federal Inland Revenue Service, Mr Zacch Adedeji, pledged to ensure the implementation of the recommendations of the committee, as they may apply, pending the approval of the President.
Adedeji declared that beyond supporting the fiscal and tax reforms, the FIRS would explore opportunities to diversify the nation’s revenue sources, as the historical over-reliance on oil has made the economy vulnerable.
He noted, ‘’Nigeria’s fiscal policy serves as the foundation of economic stability. It dictates how the government collects, manages, and allocates resources for the betterment of our people. A well-developed fiscal policy is crucial for the provision of infrastructure, healthcare, education, and social services to our growing population. Tax reforms are an integral part of a robust fiscal policy.’’
Addressing State House correspondents at a briefing attended by Adedeji and Ngelale, Oyedele argued that multiple taxation had shrunk the Federal Government’s internally generated revenue pool as opposed to increasing it.
“We have over 60 taxes and levies, officially collectible by federal, state and local governments. Unofficially, those taxes are over 200, making life difficult for our people. So the taxes at all levels of government combined, we think, should be less than 10,” he stated.
Giving a rundown of the committee’s activities in the past two months, he explained, “We have been speaking to the various policymakers from the central bank leadership, to the finance minister who is also the coordinating Minister for the Economy, the FIRS and the Joint Task Board, and even to state governors.
“We also had sessions with the Senate. So, we have been actively engaging with various key stakeholders, trying to put the framework in place for implementing our recommendations.
“All we need to do is to formally present the report to Mr. President, but I will say that once we get the nod from Mr. President, it will be like this switching on the tap and then the implementation starts immediately.”
The tax expert cited instances where his team discovered that sachet water sellers were paying seven taxes daily.
“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?” he queried.
“It doesn’t make a lot of sense to us. So, now we are in that phase of rewriting our laws. We spent time with the Senate and we would also do the same with the House of Representatives.
The former Africa Tax Leader at PriceWaterhouseCoopers said his committee would continue public consultation and stakeholder engagement till November 15, saying, “We have received input from every single state in Nigeria and we’re just starting.”
He said such efforts are crucial to the reform process, whose end results would increase Nigerians’ employability in the global gig economy.
“The most sustainable way for any country to generate revenue is to grow the economy. When businesses succeed, when individuals prosper, they pay taxes. For us, that’s the most fundamental.
“So, we’re looking at how we can remove the impediments to businesses, to trade…think about young Nigerians, many of them 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.
“So we’ll 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 shows that people also have prosperity to lift themselves and their families from poverty, and of course, they will pay taxes on their income to the government,” Oyedele further explained.
ALTON backs panel
Commenting on the development by the Federal Government, the Head of Operations, ALTON, Awonuga, said removing multiple taxes would ensure the smooth operation of the telecom sector.
He told us , “We don’t know, but we recently submitted a position paper to the Federal Government. Most of these problems of multiple taxes are from the state governments though. However, we believe that the actions of the tax committee will ripple to it and impact us.’’
“Removing the multiple taxes aimed at us will create a free flow of operations and will ensure that we do not implement the variation tariff (different telecom rates across states) we are currently pushing for,” Awonuga explained.
A facilitator with the Nigerian Economic Summit Group, Dr Ikenna Nwaosu, commended the planned elimination of over-taxation but observed that the committee needed to clarify the details of the taxes it sought to end.
Also, the Chief Executive Officer of Economic Associates, Dr Ayo Teriba, said, “It will be nice to know what the 10 taxes are. It is one thing to say that we are going to reduce the number of taxes and we are going to end up with 10.
“It is good that we do away with the multiplicity of taxes. Ten sounds like it is fewer than 200 but it is a lot still. What are these taxes? What are the rates? And the sum total of their effects? The fact that they have reduced may imply that their burden may be reduced but that it may also not imply that the burden will reduce.
“So, it sounds good that we are going to eliminate these taxes. It will be nice to see the shortlist. Also, is it federal or the federation that you will not pay more than 10 types of taxes across federal, state, and local governments? It will be good news,” Teriba stated.
