The Presidential Fiscal and Tax Reforms Committee is recommending a far-reaching cut in cost of revenue collection to one per cent.
Chairman of the committee, Dr. Taiwo Oyedele, who disclosed this at a stakeholders consultation with public policy analysts in Abuja yesterday, said, the current cost of revenue collection in the country ranges between 4 and 35 per cent, a situation he said was totally unacceptable.
Oyedele noted that global best practice cost of revenue collection was around one per cent, adding that even South Africa, which collects the highest revenue in Sub-Sahara Africa, spends less than one per cent to achieve such an outcome.
The work of his committee, the chairman revealed, would ensure fair taxation, responsible borrowing and sustainable spending.
Oyedele, who extolled the recent announcement in Angola, exempting earners of a monthly income of less than the equivalent of N180,000 from tax in that country, said part of his committee's recommendations would be the exemption of very poor people from taxation, in Nigeria, with more focus on efficient tax administration among the rich.
He said: "No country has ever earned prosperity by taxing poverty. Angola recently announced a tax reform. If you earn less than the equivalent of N180, 000 monthly, you are tax exempt. I don't mean $180,000. I mean equivalent of N180,000.
"Outcomes expected from our reform efforts include to collect taxes better. We will eliminate informal taxes and harmonise tax administration.
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"When we did our analysis, there are 60 taxes. Unofficially, we have more than 200 taxes. A truck driver told us that moving goods from one point to the other across the country, he budgets N450, 000 for all kinds of taxes and illegal collections.
"We have to stop the insanity around taxes in this country. This is chaotic. We must do away with nuisance taxes and focus on high-yielding taxes."
As part of the efforts toward reducing the tax burden on businesses and individuals, the Chairman revealed that the Minister of Finance, Mr. Wale Edun has signed the regulation for the reduction of the Withholding tax and that it would become operational once gazetted.
Dr. Oyedele said that the new regulation would exempt small businesses from Withholding Tax and reduce the rate even for bigger corporates, while exempting manufacturers and imput producers like farmers.
FIRS to change to NRS
Part of the reforms, the chairman said, would be to change the Federal Inland Revenue Service to Nigeria Revenue Service (NRS) to reflect the fact that it collects revenue for the entire federation, not just the Federal Government.
