NIGERIA’S President Muhammadu Buhari has sent a Finance Bill to parliament to change obsolete tax laws and grow revenue, Zainab Ahmed, Minister of Finance, Budget and National Planning disclosed yesterday at the Governor’s Talk moderated by Abebe Selassie, IMF’s Head of African Department.
The Bill, when passed by parliament, is expected to boost domestic revenue mobilization. This will be achieved through a suit of policies including increasing VAT from 5 percent to 7.5 percent, reintroducing excise duties commodities such as carbonated drinks and reforming outdated oil and gas laws.
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Nigeria, she said, is diversifying its revenue sources after suffering a recession which blew a huge hole in government purse in the wake of crude oil-price crash in 2014. According to her, the country’s infrastructure gap needs huge financing and the master plan to deal with the challenge, requires $3 trillion over 30 years. Nigeria has low effective tax collection and voluntary tax compliance rates. “We operated a defective social contract for long where government didn’t bother to collect taxes and citizens didn’t demand answers to poor service delivery,” she revealed.
The minister attributed this to past governments’ excessive dependence on revenue from hydrocarbons. To improve revenue collection, some agencies of government such as the Nigerian Customs are deploying technologies including blockchain technology to block leakages.
Read also: Nigeria’s Parliament Is Proposing 9% Communication Service Tax In Place of 7.5% VAT And Digital Tax.
On the vaunted negative effects of the increase in VAT, Mrs Ahmed assures that the Bill has made provision for exemptions on goods and service that are mostly consumed by the masses such as food, transport, health and education. Additionally, the government is contemplating ring-fencing the 2.5 percent increment, so that revenues accruing from it would be appropriated exclusively for education, health and human capital development purposes.
Kelechi Deca
Kelechi Deca has over two decades of media experience, he has traveled to over 77 countries reporting on multilateral development institutions, international business, trade, travels, culture, and diplomacy. He is also a petrol head with in-depth knowledge of automobiles and the auto industry.