According to the Centre for the Promotion of Private Enterprise (CPPE), the proposed increase in Tertiary Education Taxes to 3% in the Finance Bill 2023 is too soon, as businesses are still dealing with a number of macroeconomic, structural, global, and regulatory headwinds.
Dr. Muda Yusuf, Director of the CPPE, disclosed this in a report titled ‘Tweaking the 2023 Finance Bill and Options for Unlocking Revenues in 2023’.
The CPPE applauded the President’s decision to withhold assent to the 2023 Finance Bill in order to allow for greater consultation, participation, and inclusion in the legislative process.
They noted that the tax increase is part of the bill, pointing out that the tertiary education tax was raised from 2% to 2.5% less than two years ago.
It is too soon to propose another increase. Besides, companies are still contending with several macroeconomic, structural, global and regulatory headwinds. It will be inequitable to increase the tertiary education tax at this time.
This would be putting too much burden on corporate entities on business and investors in the Nigerian economy.
They urged that using companies as a cash cow for solving revenue problems “is utterly misplaced”.
The perception of corporate entities as cash cows for solving all revenue problems is utterly misplaced. We should be a lot more creative in our revenue drive so as not to overburden the current crop of taxpayers. The tax base is still extremely narrow and should widen.
The economy is about 50% informal, which meant that the incidence of taxation is largely on the formal sector of the economy.
Collection efficiency
CPPE also urged that the focus on taxation should be on efficiency and improvement in tax governance.
The focus of taxation should be on collection efficiency, broadening the tax base and improvement in tax governance. Revenue collection responsibilities should be integrated into a single agency for more efficient administration.
Additionally, there is implicit taxation as companies still have to provide supporting infrastructures and other facilities such as power generation, water supply, and security for their assets. In some instances, companies construct access roads to their premises.
The CPPE also stated that numerous taxes, fees, and levies are paid to sub-national governments and regulatory agencies, which should be considered when developing tax policies.
Entrepreneurng previously reported that the CPPE CPPE) said the plan to end petroleum subsidies would generate at least N6 trillion in revenue for the Federation Account each year.
They pointed out that the Nigerian economy is heavily burdened and encumbered by two major subsidy regimes: the fuel subsidy regime and the foreign exchange subsidy regime, and that massive sums of revenue can be unlocked from these subsidy regimes if appropriate reforms are implemented.
The CPPE also warned that excessive business taxation has a negative impact on investment, economic growth, job creation, and poverty reduction. As previously stated, the effective corporate tax rate is currently around 34%, making it one of the highest in the world.
