The Minister of Finance, Wale Edun, said the government is aiming to reduce tax rates when necessary in order to create incentives for private sector investments.
The Minister of Finance and the Coordinating Minister of the Economy, Wale Edun, says the federal government has no plan to increase the current tax rates.
Mr Edun stated this on Monday when he appeared before the House of Representatives Committee on Appropriations to defend the 2024 budget proposal.
The minister, while responding to questions from the lawmakers on the prospect of increased tax rate, said the government is not considering tax increments, but rather seeking to increase the tax bracket and capture more people and entities.
He said the government is even aiming to reduce tax rates when necessary in order to create incentives for private sector investments.
Mr Edun explained that with efficiency in collection, the government will increase the percentage of taxation to GDP to 18 per cent.
''There is no plan for an increase in the tax rate as such. The plan is to increase the revenue from taxation. The plan is to increase taxation returns as a percentage of tax to GDP from around nine per cent as it is now to 18 per cent in three years. This is closer to the African average.
''So, the emphasis is on collection not on increasing the rate. The emphasis is on collection efficiency, particularly collection. For a government that is dependent on private investments, foreign direct investment and domestic investment. The intention is to reduce taxes, not to increase it and to increase the money into creation of employment,'' he said.
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Mr Edun insisted that the focus of the government is to ensure that government revenue is increased accordingly.
''The emphasis is on raising revenue. Government spending as a percentage of GDP is very low. When you compare it to the developed world where they spend over 50 per cent, like the Scandinavian countries, even in Africa, it is too low. Which means the government is not spending enough on infrastructure and social services,'' he said.
The minister also lamented the impact of tax waivers and incentives on the revenue of the country, stating that about one per cent of the GDP is given out as tax waivers.
''About one per cent of the GDP of this country is given out as tax incentive, import duty waivers and others,'' Mr Edun said.
He said the government is reviewing the entire structure of the tax system.
