Presidential Fiscal Policy and Tax Reforms Committee has recommended the creation of a central tax agency, to be known as the Nigerian Revenue Service.
This will eliminate the over 100 different collection agencies at the federal, state and local government levels.
President Bola Tinubu had appointed Taiwo Oyedele, a partner at PwC Nigeria, to head the Presidential Fiscal Policy and Tax Reforms Committee to harmonise taxes and simplify the national tax system, removing taxes that impede businesses.
According to latest reports from the statistics office, Nigeria’s tax revenue as a percentage of GDP has dropped to 10.86% currently, from around 19.98% in 2011, much below the African average of 15.6%.
The tax reforms team is tasked with helping to raise the tax revenue as a percentage of GDP to 18% within the next three years.
Besides cutting over 60 taxes to only eight, the committee has also recommended implementing zero-based budgeting, and introducing long-term appropriation, in its report released on Thursday. The budget must be restructured to classify items under infrastructure, human capital investment, personnel cost and productivity, administrative overheads, debt service and sinking funds. Nigeria has relied on debt to finance public spending which limits its ability to fund roads, schools and other public infrastructure on account of rising service costs. It will spend 30% of its 2024 budget on debt servicing.
The fiscal advisory body has also urged the government to tackle systemic corruption, prioritise spending on basic needs to address poverty, restrict borrowing, and enhance public procurement effectiveness. Some of the initial recommendations implemented included removing value added tax on diesel and eliminating multiple taxes in the informal sector.