Nigeria’s Tax Reforms Committee unveils plan on payable taxes, FIRS/MDAs’ mandates, banks’ charges + Full List of Members

*President Tinubu Ahmed Tinubu, GCFR, has urged members of the newly-inaugurated Fiscal Policy and Tax Reforms Committee to improve the country’s revenue profile and business environment as the Federal Government moves to achieve 18 percent Tax-to-GDP ratio in three main areas of Fiscal Governance, Tax Reforms, and Growth Facilitation in the Nigerian economy

Gbenga Kayode | ConsumerConnect

In a move to make revenue derivable from taxes constitute least 18 percent of the country’s Gross Domestic Product (GDP) in few years ahead, the Nigerian Government, through Mr. Taiwo Oyedele, Chairman of the newly-inaugurated Fiscal Policy and Tax Reforms Committee, has explained  how the West African country will close the tax revenue gap of about N20 trillion annually.

Oyedele is a former Fiscal Policy Partner and Africa Tax Leader at PriceWaterhouseCoopers (PwC).

ConsumerConnect reports  President Tinubu Ahmed Tinubu, GCFR, Tuesday, August 8, 2023, instituted the Presidential Committee on Fiscal Policy and Tax Reforms in the State House, Abuja, FCT.

The government stressed the new revenue and tax reforms Committee would make Nigeria “financially buoyant” to fund its development projects without borrowing.

President Tinubu, earlier at the inauguration of the Committee in Abuja, also expressed his resolute commitment to breaking the vicious cycle of over-reliance on borrowing for public spending, and the resulting burden of debt servicing it places on the management of the limited government revenues.

The President, therefore, charged the Committee to improve the country’s revenue profile and business environment as the Federal Government moves to achieve an 18 percent Tax-to-GDP ratio within three years.

Tinubu further directed the Committee to achieve its one-year mandate, which is divided into three main areas of Fiscal Governance, Tax Reforms, and Growth Facilitation.

The President as well directed all government Ministries, Departments and Agencies (MDAs) to cooperate fully with the Committee towards achieving their mandate.

He also reminded the Committee members of the significance of their new national assignment.

According to Tinubu, his administration carries the burden of expectations from Nigerians, who desire their government to make their lives better.

“We cannot blame the people for expecting much from us. To whom much is given, much is expected.

“It is even more so when we campaigned on a promise of a better country anchored on our Renewed Hope Agenda.

“I have committed myself to use every minute I spend in this office to work to improve the quality of life of our people,” said the President.

We’re poised for minimum of 18 percent tax-to-GDP ratio in 3 years: Tinubu

In respect of the current international standing of the country in the tax sector, President Tinubu observed that Nigeria is still facing challenges in areas, such as ease of tax payment and its Tax-to-GDP ratio, lagging behind even the Africa’s Continental average.

He stated: “Our aim is to transform the tax system to support sustainable development while achieving a minimum of 18% tax-to-GDP ratio within the next three years.

”Without revenue, government cannot provide adequate social services to the people it is entrusted to serve.”

Core mandate of Committee

The President further disclosed “the Committee, in the first instance, is expected to deliver a schedule of quick reforms that can be implemented within thirty days.

A group photograph of the Committee members with President Tinubu (in blue)

“Critical reform measures should be recommended within six months, and full implementation will take place within one calendar year.”

Members of Presidential Committee on Fiscal Policy and Tax Reforms

Interestingly, Ms. Orire Agbaje, a 400-level student of Economics at the University of Ibadan (UI), Nigeria, is a member of the Presidential Committee on Fiscal Policy and Tax Reforms.

A full list of the members is as follows:

1. Taiwo Oyedele, Chairman
2. Representatives of Tax Practice, Law and Accounting Firms
3. Members of the Tax Advisory Committee
4. National Tax Policy Implementation Committee
5. Renowned Fiscal Policy and Tax Experts
6. Representative of the Chartered Institute of Taxation of Nigeria (CITN)
7. Representative of the Institute of Chartered Accountants of Nigeria (ICAN)
8. Representative of the Association of National Accountants of Nigeria (ANAN)
9. Representative of the Nigerian Bar Association (NBA)
10. Nigerian Economic Summit Group (NESG)
11. Organised Private Sector of Nigeria (OPSN)
12. Nigerian Association of Small and Medium Enterprises (NASME)
13. Women in Business (WIMBIZ)
14. Representative of the Federal Ministry of Justice
15. Representative of the Federal Ministry of Finance
16. Representative of Federal Ministry of Trade, Industry & Investment
17. Representative of Ministry of Telecommunications & Digital Economy
18. Nigerian Investment Promotion Commission (NIPC)
19. Tariff Technical Committee
20. Nigerian Ports Authority (NPA)
21. Nigerian Maritime Administration and Safety Agency (NIMASA)
22. Nigerian Upstream Petroleum Regulatory Commission (NUPRC)
23. The Federal Inland Revenue Service (FIRS)
24. The Joint Tax Board (JTB)
25. Nigeria Customs Service
26. Representative of Association of Local Government of Nigeria (ALGON)
27. National Institute for Legislative and Democratic Studies (NILDS)
28. National Institute for Policy and Strategic Studies (NIPSS)
29. Revenue Mobilisation Allocation and Fiscal Committee (RMAFC)
30. The Budget Office of the Federation
31. Accountant General of the Federation
32. National Bureau of Statistics
33. DG, Nigeria Governors’ Forum
34. Debt Management Office
35. Chairman, Finance Commissioners’ Forum
36. Central Bank of Nigeria
37. Students Tax Clubs; and
38. Partners & Observers – World Bank, IMF, United Nations, BudgIT, Tax Justice & Governance Platform

There’s about N20trn tax gap in Nigeria -Oyedele

Addressing the State House Correspondents after the inauguration by the President, Mr. Oyedele said that “there is a huge tax gap. What that means is, as of today without introducing any new taxes.

“If you get everyone that needs to pay their taxes to pay, we will not be where we are.”

The Chairman of the Committee disclosed the country’s tax gap is about N20 trillion.

We will ensure we close the gap to generate more revenue for the country, he assured Tinubu.

He further stated: “In addition to that, you would also imagine that we have in efficiencies in the way we collect the little that we currently collect….

MDAs, FIRS and revenue collection efficiency

Oyedele said: “Sometimes, I think in the 2023 budget we have, like 63 MDAs they were given revenue targets.

“Those MDAs want to be able to focus on their primary duties of why they were established.”

He noted that the “revenue mandate is a distraction for them. You have the FIRS for example.

“So, FIRS is built up and created to administer taxes efficiently.

“Imagine that we asked the FIRS to collect those revenues on their behalf.”

The Chairman also explained: “So, those agencies by focusing on their primary mandate, they will facilitate the economy development we’re looking for.

“FIRS will collect the revenues efficiently, which means not only is the top line growing, the cost of collection is reducing, and that leads to a much bigger margin to take care of the people.”

Oyedele, therefore, pledged the total commitment of members to giving their best in the interest of the country.

FIRS should administer tax collection, MDAs to focus on core mandates: Committee Chair

Restating his submission while featuring in a Channels TV programme monitored Wednesday, August 9, in Lagos, Oyedele said hitherto Nigeria’s revenue collection from taxes is one of the lowest in the world but the cost of collection is high.

The Chairman restated: “Ironically, our cost of collection is one of the highest.

“And the reason for that is that we’ve got all manners of agencies.

“The Federal Government alone, we have 63 MDAs that were given revenue targets last year, no; actually in the 2023 budget.”

He further said: “And two things that would come up from that: on one hand, these agencies are being distracted from doing their primary function which is to facilitate the economy. “Number two, they were not set up to collect revenue, so, they won’t be able to collect revenue efficiently.

“So, move those revenue collection function to the FIRS.

“It has two advantages: the cost of collection and efficiency will improve, these guys will focus on their work, and the economy will benefit as a result.”

Oyedele clarified his submission this way: “If you are Customs, focus on trade facilitation, border protection and if you are NCC (Nigerian Communications Commission), just regulate telecommunications. You are not set up to collect revenue.

“It can be your revenue and someone else can collect it for you. There will be more transparency because you see what is being collected and is accounted for properly.

“It is also a way of holding ourselves to account as to how we spend the money we collect from the people.”

On likely backlash from other MDAs, stakeholders

In regard to any possible backlash from several government revenue-generating MDAs and other stakeholders in the tax administration ecosystem, if the Committee’s suggestion is implemented, he clearly acknowledged there will be “pushbacks” from stakeholders and others benefitting from the process.

Oyedele, however, stated that the Committee’s sole objective is to not take what belongs to anyone but what should come to the government.

He also described the extant Treasury Single Account (TSA) initiative as a step in the right direction, but it has not been fully developed.

According  to him, the TSA will help his Committee’s work, but there are more to do to maximise the initiative.

Addressing sundry banks’ charges for consumers

Oyedele on the programme as well said the new Presidential Committee on Fiscal Policy and Tax Reforms would look into excess bank charges in the financial sector of the economy.

He submitted that Nigerian businesses pay as high as 65 to 70 levies and taxes, but that the Committee’s plan is to reduce the number of taxes to about 10 in the economy.

“Many of our existing laws are outdated; hence they require comprehensive updates to achieve full harmonisation to address the multiplicity of taxes, and to remove the burden on the poor and vulnerable while addressing the concerns of all investors, big and small,” stated he.

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