The European Union (EU) says that Nigeria’s tax to Gross Domestic Product (GDP) ratio is one of the lowest in the world.
Head of EU Corporation, Cecile Tassin-Peizer made the remark at a Workshop on the Draft Directives for the Harmonisation of Tax Expenditure Evaluation Methodology in ECOWAS member states held in Abuja on Tuesday.
In her remarks at the event, she noted that; “the global economic challenges resulting from the COVID-19 pandemic and the invasion of Ukraine by Russia have affected economic opportunities of countries and individuals.
“West Africa is no exception. In fact, one can argue that the impact of these challenges are felt even higher in this region than in so many others.
“Domestic revenue is an important source of government expenditure funding, but revenue mobilisation remains a crucial challenge.
“Efficient management of internal taxation for improved revenue generation cannot be overemphasised. As we all know, the tax-to-GDP ratio in this region is too low and our host country, Nigeria is one of the lowest in the world.
“Therefore a project such as this can demonstrate what is possible and can work with you (member states) and the regional organisation to turn the trends.”
Responding, the federal government revealed that it is planning to curtail external borrowing through blockage of leakages from tax remittances.
Director, Technical Services, Ministry of Finance, Budget and National Planning, Fatima Hayatu, who made the disclosure at the event, dismissed the impression in many quarters that the debt volume of the federal government is very high.
She also argued that with financial discipline the debts are serviceable, assuring that: “So much has changed since the last time we met especially as it concerns tax incentives and remittances not bringing development and stopping external borrowings.
The system has become more transparent, tax incentives to encourage ailing industries have also improved.
“The tax rebate that the federal government has given has improved agriculture and the industries affected by the COVID-19 pandemic. It has helped them to retain their staff and it is an achievement for us as a government. We want people to retain their jobs and get employed to reduce the spate of insecurity in the country,” she argued.
On the impact tax remittances are having on the volume of debts, she said: “If we pay more taxes and redirect the taxes to the right fiscal sectors, we will certainly reduce our debt burden.
“If you look at the ratio of the debt burden to our GDP, you will notice that it is not as if the debt is too much. The debt is not what the government cannot surmount. This programme is to brainstorm on how to block leakages where taxes are diverted to.
“If we transparently block the leakages, the government will borrow less and there will be more funds to execute projects without borrowing.”
