• News - South West - Lagos
  • Updated: November 06, 2020

All Nigerian Adults Must Be Made To Pay Tax, Part Of Citizenship Obligation - El-Rufai

The Governor of Kaduna State, Nasir El-Rufai said that all Nigerian adults must be made to pay tax, "as part of our citizenship obligation," as Nigeria falls "way behind" countries of about 20 percent of GDP.

The governor said this during the Annual Tax Conference of the Chartered Institute of Taxation of Nigeria (CITN), in Lagos Thursday, themed, "Taxation and Economic Competitiveness: Imperatives for National Development – a Nigerian Subnational Perspective”.

He posited that as the world moves away from oil, as it loses its "primacy", Nigeria should "look inwards" and ensure that adult citizens fulfill their obligations.

“With national tax revenues (oil and non-oil) still less than 7 percent of GDP, Nigeria is way behind the average of comparator nations of about 20% of GDP. As the world goes green, and crude oil loses its primacy as a leading source of energy, Nigeria must look inwards and compel every adult to pay tax as part of our citizenship obligation," El-Rufai said.

Political Leaders, Tax Professionals

He charged political leaders and tax professionals to "put our collective heads together" to ensure that the objective is achieved nationally and "as soon as possible".

“In light of the situation that we are, we have very few options other than develop our capacity to collect to broaden the tax net, assess and collect taxes from individuals and companies to levels of our comparator nations – at least 20% of GDP within the shortest possible timeframe. As political leaders and tax professionals, we must put our collective heads together to ensure this national objective is achieved as soon as possible”.

El-Rufai decried the low taxes generated by states, explaining that the revenues generated by states make up "less than one percent" of the country's GDP, despite the fact that states are allowed to "collect many taxes, levies and fees" as provided in the Taxes and Levies (Approved List for Collection) Act, LFN CAP T02.

Meagre Internally Generated Revenue

He said, “The total internally generated revenues by states are currently less than one percent of GDP, despite the fact that Nigeria’s current fiscal federalism framework allows states (and local governments) to collect many taxes, levies and fees as in the Taxes and Levies (Approved List for Collection) Act, LFN CAP T02.

“We were determined from 2015 to assess and collect enough tax revenues to cover at least our personnel costs, and in the medium term, our entire recurrent budget such that we don’t need to wait for the monthly FAAC ‘handouts’ to keep our governmental operations running.

READ ALSO: Sight Of Destruction In Lagos Made Me Nearly Shed Tears -El-Rufai

“To underscore our commitment to this, the then Deputy Governor and I resolved to donate 50 percent of our salaries and allowances to the state treasury until we are able to achieve the first benchmark.We did so in 2019!”

Need for Infrastructure

He averred that working infrasturcture allow companies be competitive, adding that excessively taxing businesses could add more burden on the business and affect competition.

“The positive effects of tax revenue depend on prudence. For instance, efficient infrastructure enable firms to be competitive, and inefficient infrastructure harms competitiveness. Excessive taxation can be an added business burden that also adversely affects competitiveness. For example, multiple and high levels of taxation affect supply and output prices, firm revenues, and profits.

“The pace of national development, especially in developing and emerging economies such as Africa critically depends on the role government plays in providing both the traditional services that are her exclusive reserve such as law and order, defense, etc. and non-traditional services such as justifiable economic and social interventions in infrastructure, education and basic healthcare. Recent literature and country experiences suggest that ‘developmental states’ – that often intervene significantly in social and economic sectors – are better able to achieve faster economic growth and diversification than the regulatory states promoted by the now-discredited Washington Consensus which pushed for lesser government involvement in the economic arena.

“From the foregoing, it is clear that four key points have emerged as the guiding principles for achieving development with taxation:

“Forming and running efficient and effective governments with strong policies, institutions and executive capacity;

“Performance-based budgeting to enhance efficiency and effectiveness in the utilization of government revenues;

“Prioritizing expenditure to intervene in sectors that accelerate national economic growth and performance;

“Building autonomous institutions that reduce uncertainties and transaction costs, influence socially responsible choices, and compel rational actions," he said.

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Kindness Udoh
Kindness Udoh

A severely bored individual with a knack for making sense of the human existence. He writes leaning...

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