Nigerians may pay more as Tinubu seeks higher tax-to-GDP

President Bola Tinubu says his administration aims to rapidly increase Nigeria’s tax coverage as a way of raising revenue to cut back on government borrowing.

The federal government aims to attain an 18% tax-to-GDP ratio within three years, the president said Tuesday. Nigeria’s tax-to-GDP stood at 10.86% by 2021.

Mr Tinubu spoke during the inauguration of the Presidential Committee on Fiscal Policy and Tax Reforms. He asked the committee to deliver on fiscal governance, tax reforms, and growth facilitation.

Raising tax-to-GDP value could mean Nigerians paying more, or more individuals and businesses being brought into the tax net.

– Debt against Tax and GDP

Nigeria’s total public debt was N25 trillion or $103.11 billion by December under former President Muhammadu Buhari.

The Debt Management Office has warned that public debt could reach 37.1% of GDP in two years. That would be close to the government’s self-imposed 40% limit and could cause the country to spend more than its entire revenue on debt repayment. Debt to GDP was 23.4% in September.

“Our aim is to transform the tax system to support sustainable development while achieving a minimum of 18 per cent tax-to-GDP ratio within the next three years,” the president said.

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

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

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

– Don’t blame citizens

Mr. Tinubu said the committee bears the responsibility of aiding the administration in meeting the hopes of citizens for an improved quality of life.

“We cannot fault the people for their high expectations of us. To whom much is given, much is anticipated,” he remarked.

The committee’s chairman, Taiwo Oyedele, said the committee will act in the nation’s best interest.

“Many of our existing laws are outdated, necessitating comprehensive updates for full harmonization to address the multitude of taxes,” he said. “This will alleviate the burden on the less privileged while addressing the concerns of all investors, regardless of size.”

Mr Oyedele, a former partner at PriceWatersCoopers, was appointed in June.