- Says Finance Act should be introduced once in 5yrs
The Presidential Fiscal Policy and Tax Reforms Committee (PFPTRC) has proposed a one per cent tax collection fees by firms and consultants who collect taxes on behalf of the government.
According to him, the high percentage collection fees have hindered the efficiency and effectiveness of tax collection across the three tiers of government.
Speaking yesterday in Abuja on Monday at a stakeholder sensitisation workshop, Chairman of the Committee, Taiwo Oyedele proposed that 1 per cent collection fee should be the benchmark.
"One of the challenges we are facing currently in tax efficiency is the high percentage of collection fees where you find some firms or consultants taking as high as 35 per cent of the entire tax realised as collection. It is not sustainable. Therefore, we are proposing a 1 per cent collection fees to the federal government for adoption,"
Also responding to enquiries in the yearly Finance Act introduced by the federal government, he noted that the annual introduction of Finance Acts also distorts planning and investments by both national and multinational companies, adding that "Yearly Finance Act has been abused and has caused more harm than good which is why we think it should be introduced just once in 5 years,"
On Value Added Tax, he said "The committee have also recommended VAT should be put on exclusive list to have a central collection system but 90 per cent should go to states, and we have also proposed that Company Income Tax (CIT) should gradually be reduced in the next five years from 30 to 25 per cent," he explained
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Speaking on the best models for revenue sharing in Nigeria, Oyedele stated that "The committee doesn't believe that it is necessary for FAAC to meet monthly in Abuja, however, states and local governments can be credited directly on a daily basis from the proceeds of all the revenue accrued to them, rather than commissioners coming every month to discuss and argue over how revenue will be shared," he added.
He also revealed that the committee's reform of the withholding tax, which he said remained the most difficult and complex tax to comply with in Nigeria, had been approved.
He said: "The good news is that it has moved from proposal to approval because it has been signed by the finance minister, waiting to be gazetted. Among our objectives is to simplify the tax to reduce the burden on businesses, particularly SMEs. We have reduced the rates for businesses producing goods and services because their margins are very small"
The committee further recommended the replacement of the Federal Inland Revenue Service (FIRS) with the National Revenue Service arguing that "The FIRS does not collect revenue for the federal government alone but for sub nationals as well, therefore the name should have a national outlook,"
