Debt crisis: Nigeria must plug tax leaks – Oyedele
Nigeria’s debt problem is not as difficult to solve as some make it look, Taiwo Oyedele, a partner at PWC has said.
Speaking on “sustainable approaches to public debt financing,” at the 27th NESG summit at Abuja on Tuesday, Oyedele said the first step is for the Federal government to harmonize the multiple taxes. This also means reducing the multiplicity of tax collection agencies.
For instance, agberos in Lagos collect over N120 billion, in revenue, every year. That is the highest revenue collection when compared with any of the 35 states in Nigeria with the exception of Lagos state, he said.
One of tackling these tax leaks is to convert informal taxes and implicit taxes to formal government revenue considering the current debt situation of the country.
“Contrary to public belief, Nigeria’s debt crisis should not be tackled from a debt angle rather Nigerians should view it from a revenue misappropriation angle”.
“I think in terms of revenue, Nigeria needs to start with what it has; and then optimize.”
“As of today, less than 10 tax collection agencies account for about 98 percent of tax revenue across all levels of government. Yet we have over 100 tax agencies.”
“We have state internal tax revenue services, FIRS, and custom service. But guess what? We have still had all manner of people collecting revenue,” he added.
He also emphasized the need for the use of technology to expand the country’s tax base.
He used South Africa as an example of the impact of technology in tax collection.
He stated that despite the coronavirus pandemic, South Africa remitted tax revenues in the equivalent of N34 trillion in 2020 alone while Personal Income Tax was N14 trillion.
“Nigeria has never collected a Personal Income Tax of even N1 trillion in the last years,” he added.
He further stated that Nigeria needs to situate the country’s tax burden in ranking.
“About 96 percent of people paying PIT in Nigeria today are the people that should have been exempted in the first place because they are the people who are on minimum wages of N30, 000, who are struggling to survive”.
Patience Onahi, director-general Debt Management Office of Nigeria at the NESG interactive session stated that the FG has issued promissory notes of over N1.5 trillion which were approved by both FEC and NASS.
She stated that the aim was to be able to put money in the hands of those that the FG has owed for 6-10 years to enable them to run their businesses.
“My charge is usually to use borrowed funds for what they are intended to achieve, and subsequent growth would be inevitable,” Onahi said.
Oyedele further emphasized that Nigeria needs to deviate from the fixation on owning assets.
“If I had my way, I would sell almost all the assets that Nigeria has, including the oil assets.”
He emphasized the gains of Saudi Aramco and Chinese companies.
“Saudi Aramco declared over $35 billion in 3 months, yet in over 44 years, Nigeria cannot boast of such.”
In his concluding remarks, he stated that “It is a standout that public accumulation needs to be curtailed in the region before we get to the point where debt settlement would be the only agenda of the government in years to come.”