Minister of Finance, Kemi Adeosun, has said only 14 million out of the 69.9 million economically active Nigerians pay tax, reflecting a low compliance of 20.03 per cent.
Adeosun, who disclosed this at the NSE-Bloomberg CEO Roundtable at the weekend, lamented that, even among the tax payers, there was widespread malpractice that resulted in only part of the actual income being subjected to tax. This, she added, had degenerated to an unfortunate situation whereby out of the 14 million tax payers only 214 individuals in the entire country pay N20 million or more annually.
Adeosun, who delivered a keynote address at the event titled, 'Changing the Growth Narrative', revealed that just last Wednesday, the Federal Executive Council granted the Ministry of Finance the permission to sign the global convention on Base Erosion and Profit shifting that had allowed companies who generate profits in Nigeria, evade taxes by shifting those profits to countries where little or no tax is payable. "These practices harm Nigeria, these practices harm Nigerians, and these practices must stop," she said.
As part of its efforts at expanding the tax revenue base, Adeosun stated the federal government had engaged one of the world's leading global investigation agencies and it had traced funds that originated from Nigeria to all parts of the world. "The illicit flow of funds out of Nigeria, harms our nation, depriving us of essential funds which are used to finance development in other nations," she said.
Nevertheless, Adeosun noted that, the government recognised that bringing up the issue of tax would automatically bring up the issue of service delivery and good governance. "We welcome that dialogue because it is an important part of the social contract that any tax payer has the right to demand. In that regard, you have the full assurance that the President Muhammadu Buhari-led administration is committed to best value, eradicating corruption and driving Nigeria's growth."
The finance minister, who noted that, revenue mobilisation was critical to the success of Nigeria's economic reform agenda, gave assurances that the federal government was working on strategies to drive non-oil revenue growth and achieve inclusive growth.
Decrying Nigeria's tax to GDP ratio of 6 per cent, one of the lowest inn the world, she pointed out that, the appalling level suggested widespread ignorance of the nation's tax laws. Noting that the government was working to correct this, she stressed that there were a lot of work to be done for the federal government to build a sustainable revenue base that will deliver inclusive growth.
According to her, "We must amend Nigeria's low level of tax compliance. A tax to GDP ratio of just 6per cent, suggests widespread ignorance of our tax laws. We are working to amend this. Just yesterday, we announced plans to recruit and train 7,500 Community Tax Liaison Officers under the N-Power scheme. These young people will be subjected to a rigorous and intensive education on the tax system, sales, communication skills and civic education before being deployed to their communities to provide tax education and enroll new tax payers."
Speaking on the plans by the government to drive growth, Adeosun, said, "This administration is signaling strongly that it will continue to prioritise infrastructure spending as a fiscal lever to unlock growth."
She revealed that, in the last 12 months, the government had spent an 'unprecedented' N1.2 trillion, pointing out that, "Our road spend alone was above N70 billion compared to just N19 billion in 2015. In 2016, transport and aviation received N143 billion.
This drive, she added, was coupled with the important reforms in the 'ease of doing business', which addresses the soft infrastructure that will enable businesses and commercial activities flourish. Private Partnerships in Nigeria and are presently reviewing the PPP framework, whilst trying to resolve outstanding issues with existing and even failed PPP projects. Investor confidence will grow as a function of how we rectify the inherited situations rather than how quickly we can open up new opportunities
Stating that, "Our infrastructure deficit is so deep and so critical that we fully recognise that government cannot do it alone," Adeosun said, "Indeed, even if we were to dedicate our entire budget to capital projects, which before you suggest it as a solution, is impossible, it would not be sufficient."
"So, it is critical that we engage with the private sector. To this end, we intend to revive Public Nigeria's private sector is very efficient, resilient and creative."
Welcoming participants to the event, the Chief Executive Officer, Nigeria Stock Exchange, Oscar Onyema, said the bourse continued to position itself not only to be a credible platform for raising capital, but to be a hub for innovative and creative ideas.
For example, he pointed out, "we have introduced a few initiatives such as the Green Bonds and FGN Savings Bond into the market. We have automated the mechanism for trading rights issues on the Exchange and continue to work towards the launch of exchange traded derivatives."
"We recently launched X-Academy, our financial literacy and inclusion platform designed to provide education services to individuals who want to gain a better understanding of various aspects of the capital markets," he added.
Onyema expressed the confidence that "the learnings from our interactions during this CEO Roundtable will elevate our business strategies to take advantage of the tailwinds emerging in our economy and unlock its growth potential."