Nigerian Government Aims to Drastically Reduce the Number of Taxes to Under 10

The Nigerian federal government, through the Presidential Committee on Fiscal Policy and Tax Reforms, has unveiled plans to significantly reduce the multitude of taxes in the country from approximately 62 to less than 10.

Taiwo Oyedele, the Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, made this announcement in Abuja during the 53rd annual conference of the Institute of Chartered Accountants of Nigeria.

Oyedele revealed that a staggering 62 taxes are currently levied across various government tiers in Nigeria, imposing a considerable burden on local businesses. He also expressed concern about the numerous informal taxes collected throughout the nation, some even by non-state actors, empowered either directly or indirectly by the government.

“At the federal level, the list is somewhere close to 16, officially at the state level it’s 25, at the local government level it’s 21. But this is just the beginning of the story. The story is incomplete until you add the over 108 informal taxes collected all over the place. In fact, we have bicycle tax and wheelbarrow tax in Nigeria. I think if you’re looking for the definition of wickedness, it would be to find a man who is struggling to make ends meet pushing his wheelbarrow in the sun and then say, ‘You have not paid your tax,'” he lamented.

Oyedele emphasized his goal to streamline the number of taxes to fewer than 10, with the aspiration for single-digit figures. The intention is also to reduce the number of revenue collection agencies to just one for each level of government—federal, state, and local. This streamlining aims to allow these agencies to focus on their primary mission of making citizens’ lives easier.

Addressing Persistent Issues:

Furthermore, Oyedele highlighted the pressing issues Nigeria must confront, such as poverty, low revenue, high debt, declining investments, and increasing youth migration out of the country. He referenced the multidimensional poverty index, which reveals that more than 133 million Nigerians experience multi-dimensional poverty, taking into account factors like healthcare access, education, security, and more.

“We have widespread poverty, low government revenue, and, consequently, high public debt. The debt service to revenue ratio is one of the highest worldwide. Investment is decreasing, and without investments, economic growth is unattainable. Whether domestic or international, we are not attracting enough investment. Many existing investors are leaving, and those who remain are questioning if they can continue. So, these are fundamental issues we must address. People are leaving the country, and this is concerning,” Oyedele emphasized.

He advocated for a change in the government’s approach to public expenditure by measuring it against GDP. He also stressed the importance of how tax revenues are utilized, highlighting the need for these funds to address essential needs such as drinking water, basic education, and infrastructure.

In response to Oyedele’s remarks, Matthew Gbonjubola, the head of FIRS’ Special Tax Operations Group, noted that tax revenues consistently account for around 90% of the government’s total income. He mentioned that the government had recently revised the VAT module to create a more favorable environment for businesses and individuals in the country.

Gbonjubola also outlined ongoing efforts to improve the taxpayer experience and data-sharing initiatives between the FIRS and other organizations, including the Central Bank of Nigeria and the Financial Intelligence Unit. The Agency is actively working to facilitate the tracking and reporting of income earned by Nigerians in the diaspora.