Nigeria: Presidential Committee Clarifies Tax Reforms, Assures No New Taxes or Higher Rates

Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, has emphasized that the federal government does not intend to introduce new taxes or impose higher tax rates. Oyedele, a former fiscal policy partner and Africa tax leader at PriceWaterhouseCoopers (PwC), addressed some frequently asked questions (FAQs) about the committee’s objectives.

He stated that no government agency has been stopped from collecting revenue, but the committee’s mandate is to harmonize tax collection. While many agencies are empowered to collect revenue by law, Oyedele explained that the plan is to streamline fragmented revenue collection functions into one agency for each level of government. This approach, he noted, is common in many countries, including leading tax regimes in Africa, and aims to enhance efficiency while allowing agencies to focus on their primary mandates.

Oyedele clarified the committee’s goals, saying, “Our mandate is to reduce the number of taxes and levies while harmonizing revenue collection to reduce the burden on the people and businesses. The objective is to avoid taxing investment, capital, production, or poverty.” The committee plans to review and re-enact major tax laws holistically, minimizing the need for frequent changes through annual finance acts.

Regarding the committee’s aim to achieve a tax-to-Gross Domestic Product (GDP) ratio of 18 percent in three years, Oyedele explained that the average tax-to-GDP ratio for Africa, excluding Nigeria, is around 18 percent. This serves as the basis for the 18 percent target and the estimated tax gap of N20 trillion. Oyedele emphasized the significant revenue generation opportunity by leveraging technology and tax intelligence to close this gap.

In summary, the committee’s focus is on streamlining tax collection processes, reducing the tax burden on citizens and businesses, and achieving a tax-to-GDP ratio in line with African averages. The goal remains to promote economic growth and development while ensuring a fair and efficient tax system.