Leadership (Abuja)

16 May 2013

Nigeria: Minister Calls for Effective Tax Management to Boost Economy

The Minister of State for Finance, Dr Yerima Ngama, on Thursday in Abuja called for an effective tax management system to help boost the country's economy.

Ngama made the call at the African Tax Forum organised by the Federal Inland Revenue Services (FIRS) in collaboration with the International Tax Investment Centre of Washington DC in the U.S.

He said tax remittance in the country was yet to reflect positively on the current economic growth in the country.

According to him, the African continent has witnessed a rise in economic activities in recent years.

The minister said there was the need to research and strategise on innovative ways to improve computation and tax rendition in countries.

"The tax collected in Ghana is about 27 per cent of the country's GDP and, in fact, in most African countries tax collection amount to about 10 per cent of their GDP.

"But in Nigeria, the total tax collected amount to just seven per cent of the GDP. This shows that so many people and companies are not rendering tax returns," he said.

Ngama said Nigeria needed to work on its taxation methods "because what is being collected now is a pittance compared to what can be gotten if we improve on our methods.

"It just has to be like it is being done successfully in the Customs' duty collection, with businesses going online to access it by themselves.

"They then pay through the bank and later reconciliation is done. That can be extended to tax payment as well.

"You don't need the tax collector to be at your door for you to compute and surrender your tax."

Ngama said that government was yet to get some of the informal business transactions into the tax net.

"A lot of economic activities are taking place, but most of it is informal. And when you have this kind of business structure, it is difficult to collect all the taxes that government is supposed to collect.

"But we have had a lot of improvements. Five years ago 54 per cent of the business that took place in this country was informal, but today that has been reduced to 46 per cent.

"More people are registering their businesses and adopting the right accounting practices by keeping records of all transactions, thereby making it easier for the tax collectors to do their jobs," he said.

The Acting Chairman, FIRS, Alhaji Kabir Mashi, said the meeting was aimed at partnering with international experts such as the International Tax Investment Centre.

"The ultimate aim is to help Africa improve on its tax collection," he said.

Mashi said the forum would help countries learn best practices and how best to improve on task collection.

"Nigeria has its own peculiarity, but the bottomline is how does this generate more revenue for the various governments to execute their day-to-day projects.

"Nobody wants to pay tax. So, the taxpayer wants to minimise the tax he is supposed to pay and the tax collector wants to see that everything that is expected is paid.

"This is why we have come together to deliberate as a team on how to improve by tapping from successes from other countries and improving on them," he said.

Dr Daniel Witt, the President of the International Tax Investment Centre, said the key lesson for Africa was to understand that the engine to economic growth was the private sector.

He said the forum's focus would be on how best to harness the activities of government and the private sector to ensure effective tax remittance in Africa.

"What we are going to be teaching is how to set some of the fundamental role for the country's private sector on how best to manage its tax policy," he said.

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