The Director-General, Budget Office of the Federation, Mr. Ben Akabueze, says taxation plays a critical role in the finances of any Government, saying it is a way governments are funded. He said if the massive developmental challenges facing the country would be fixed, there was a need for a much larger budgetary expenditures.
According to Akabueze, Nigeria’s current six per cent of Gross Domestic Product would have to be improved upon to witness real development. Comparing Nigeria’s tax to GDP ratio with that of some African countries like South Africa which has 33 per cent; Egypt 32 per cent; Kenya 23 per cent; Ghana 18 per cent, among others, the Director-General emphasized the need to improve on the country’s figure.
Akabueze spoke in Lagos at the Chartered Institute of Taxation of Nigeria’s seminar on the 2018 National budget. His presentation was titled, “The 2018 budget and key imperatives for economic development”. He said, “Nigeria’s abysmally low tax to GDP ratio of six per cent, with attendant dependence on rents from natural resources for government finances, is not sustainable. It is not only a source of revenue to government but also a means of income redistribution, as well as fiscal policy tool for development of strategic sectors.”
The Chief Executive Officer, RTC Advisory Services, Mr. Opeyemi Agbaje, explained that the Economic Recovery and Growth Plan was a medium-term economic policy strategy developed by the Federal Government to restore growth in the midst of economic recession.
Agbaje, whose presentation was anchored on the ERGP, said, “We observed that the biggest policy advances in the ERGP were in the areas of ease of doing business and enabling environment initiatives and greater Forex liquidity.
“In our view, the biggest challenge is implementation founded on a lack of conviction around an economic strategy focused on markets and private capital traceable to leadership in government itself. “I believe the ERGP is a strong document with the potential, if faithfully implemented, to transform Nigeria’s economy in the medium term.”
The Dean, Direct Tax Faculty, CITN, Mr. Taiwo Oyedele, said there was a need for tax reform in order to raise the country’s tax revenue for economic and developmental uses. In his paper entitled, “Budget, tax reforms and fiscal projection,” Oyedele, a tax professional and Partner at Pricewaterhouse Coopers, explained that tax reform should not be a difficult task to achieve as other countries had done it successfully.
Oyedele said, “If the amount you are spending to service your debt is about 40 per cent of your revenue, it’s a serious crisis situation, because the borrowing itself is not significant but servicing it is very expensive.”