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Nigeria’s VAT collection lowest in Africa – Speaker Abbas

Nigeria’s VAT collection lowest in Africa – Speaker Abbas...Continue The Full Reading.

 The Speaker of the House of Representatives Rt. Hon. Abbas Tajudeen, has decried that Nigeria’s efficiency in collecting Value Added Tax (VAT) “is the lowest among its African peers, indicating significant inefficiencies in its tax system.”

He, therefore, expressed the readiness of the 10th House to aid the economic policies and programmes of President Bola Ahmed Tinubu administration.

This, Speaker Abbas noted, includes engagement with stakeholders on laws governing finance, tax, and oil sub-sectors of the economy, with the aim of causing positive reforms.

The Speaker stated this on Tuesday in Abuja while delivering his keynote address at the opening of a two-day retreat for members of the House.

The legislative retreat on economic transformation and development was organised by the House in collaboration with the Federal Inland Revenue Service (FIRS) and the Konrad Adenauer-Stiftung Foundation (KAS).

The theme of the retreat is ‘Navigating Change: Legislative Strategies for Economic Transformation.’

Speaker Abbas noted that the House made a deliberate decision to focus on tax reforms and modernisation as well as a review of the implementation of the Petroleum Industry Reform Act (2021). “The overarching objective is to discuss and identify concrete legislative strategies for economic transformation,” he said.

The Speaker expressed his pleasure that the legislative retreat was taking place “at a point in our nation’s economic landscape when the current administration is diligently implementing policies and initiatives to steer our economy towards recovery, growth, and sustainable development.”

He stated that the commitment and foresight shown by the government in addressing economic challenges “deserve commendation, and it is imperative that we, as legislators, align our efforts to support and enhance these endeavours.”

Speaker Abbas said: “As a critical arm of government, the legislature has a crucial role in shaping our nation’s economic transformation and development. Part of our law-making powers is the authority to enact tax reforms and strengthen resource governance mechanisms. By designing and implementing progressive tax policies, we strive to ensure a fair and efficient tax system that boosts revenue while fostering economic growth and equity. This involves not only broadening the tax base and simplifying tax codes but also enhancing compliance and minimising loopholes that benefit only the wealthy.

“Furthermore, the legislature’s oversight function is central in the governance of natural and financial resources. It ensures transparency and accountability in the exploitation and management of resources, which is essential for sustainable development. By holding government and private sectors accountable, the legislature helps prevent the mismanagement and corruption that can often undermine economic progress.”

He added that the retreat aimed to foster stakeholders’ engagement, ensure constructive dialogue, exchange ideas and offer insights on legislative strategies that will contribute to the economic transformation of our country.

“Accordingly, this forum allows us to take a deep dive into the tax reforms instituted by President Tinubu and undertake a review of the implementation of the Petroleum Industry Act (2021). We consider these two initiatives vital in our nation’s quest for economic recovery, transformation and growth. The two areas speak to both the oil and non-oil sectors of the Nigerian economy,” he said.

While stating that Nigeria’s tax revenue struggles are primarily due to narrow bases for indirect taxes, low compliance rates among taxpayers, substantial tax exemptions, and generally low tax rates, the Speaker added that the situation was compounded by “a lack of enthusiasm and morale for tax compliance, contributing to the nation’s underwhelming fiscal performance.”

He stressed: “Comparatively, Nigeria’s efficiency in collecting Value Added Tax (VAT) is the lowest among its African peers, indicating significant inefficiencies in its tax system.

“This trend of low tax revenue, coupled with a continued dependency on the increasingly unstable oil revenue, presents a major risk to Nigeria’s fiscal sustainability. It also highlights an important area for potential reform to boost revenue and stabilise the country’s economic framework.

“The lack of growth in non-oil revenue sources and the volatile nature of oil income underscore the urgent need for Nigeria to diversify its revenue base and enhance its fiscal management to ensure economic stability and growth.”

Speaker Abbas noted that several empirical studies had shown that Nigeria has the potential to further increase revenue if priority tax reforms are implemented. He stated that “the House stands ready to support the Executive to achieve its overall goal of reversing the negative trend.”

He also noted that this is in keeping with the Legislative Agenda of the House, which prioritises economic growth and development, focusing on economic restructuring, diversification and agricultural development and enacting tax reforms that will simplify our tax codes, expand the tax base and strengthen mechanisms for compliance.

The Speaker stressed: “Of particular interest to the House is increasing government revenues without unduly burdening the citizens, especially the vulnerable.”

Another important thematic area at the retreat, Speaker Abbas noted, was the potential of digitalisation and technology to transform tax administrations by enhancing the efficiency, transparency, and fairness of tax systems. He said these advancements enable tax authorities to collect, process, and utilise information more effectively, leading to improved operational capacities.

For taxpayers, he said integrating digital tools could simplify compliance, making it a more seamless part of everyday personal and business activities, thereby reducing friction and increasing ease of engagement with tax systems.

The Speaker noted that the second leg of the retreat centred on the Petroleum Industry Act (PIA), which represents a legislative milestone passed by the 9th Assembly. “This Act is not just a piece of legislation but a transformative blueprint designed to overhaul the petroleum industry, which is the backbone of our economy,” he said, adding that, “It’s an opportunity to align our actions with our aspirations, ensuring that this vital sector operates efficiently, transparently, and, most importantly, beneficially for every Nigerian.”

Speaker Abbas stated that the National Assembly is vital in ensuring continuous review of the PIA to ensure its effectiveness in a rapidly evolving industry landscape. This, he said, involves meticulously monitoring the implementation of the Act, analysing its impacts, and identifying areas where modifications may be necessary.

“For this reason, we are actively engaging various stakeholders at this retreat, including government bodies, industry experts, and community representatives.

“Today’s sessions are designed to gather diverse perspectives and insights, which will be essential for making informed amendments that address emerging challenges and ensure that the Act meets its intended objectives.

This iterative process will not only help in fine-tuning the Act but also ensure that it remains aligned with the broader economic and environmental goals of Nigeria,” he said....Continue Full Reading.>’.

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