Speaker of the House of Representatives, Tajudeen Abbas, has raised worry about Nigeria’s low tax-to-GDP ratio of 6%, despite being Africa’s largest economy. This number falls below the global average and the World Bank’s minimal benchmark of 15% for sustainable development. Speaking at an interactive session on Tax Reform Bills organised by the House at the National Assembly Complex in Abuja, Abbas emphasised the urgency of addressing the issue in order to boost economic output and reduce reliance on debt finance.
“Nigeria, Africa’s largest economy, has a tax-to-GDP ratio of only 6%, well below the global average and the World Bank’s minimal standard of 15%. This is a challenge that we must solve in order to lessen our dependency on debt financing, maintain fiscal stability, and protect our country’s future,” Abbas stated.
Abbas emphasised the proposed tax reform measures’ goals, which include diversifying revenue sources, promoting equity, and creating a favourable climate for investment and innovation. However, he highlighted the importance of careful study to ensure that the reforms are fair and balanced.
“Taxes should be fair, transparent, and justifiable, weighing the need for public revenue against the costs imposed on individuals and enterprises. As representatives of the people, we must approach these reforms with caution, considering their repercussions for all segments of society,” Abbas stressed. Abbas acknowledged the controversy around the laws and appealed for constructive discourse.
“Debates in the media, civic society, and among stakeholders highlight the significance of these measures. Such discussions are beneficial in a democracy. “This session aims to channel these debates into productive outcomes by listening to different perspectives and addressing ambiguities,” he stated. The Speaker stated that the House has yet to take a definitive position on the legislation.
“Our responsibility is to thoroughly review them to ensure they are in the best interests of Nigerians. “We owe this duty to the people,” he stated. The interactive session, dubbed a pre-legislative review, allows parliamentarians to consult with experts and stakeholders to better grasp the ramifications of the proposed amendments.
Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, told lawmakers and stakeholders that the reforms are not intended to target or damage any area. “The proposed tax reforms will ensure efficiency and increase revenue for states where goods and services are consumed,” Oyedele told me. He went on to say that VAT revenue is now allocated as follows: 15% to the federal government, 50% to states and the FCT, and 35% to local governments, and that the revisions will have no detrimental impact on this system. Encouraging the Digital Economy: Changes to income tax regulations would allow for remote work in the global business process outsourcing (BPO) industry, assisting Nigerian youngsters in the digital economy.
Boosting Exports: Measures to increase the export of goods and services. Small enterprises with annual turnovers of ₦50 million or less might benefit from tax exemptions like as 0% corporate income tax, VAT, and withholding tax. Abbas reassured Nigerians that the legislative process will prioritise public and national interests, laying the way for long-term economic prosperity.
