May 16, 2019 / 08.00AM / NESG
Nigeria Economic Summit Group’s (NESG’s) Fiscal Policy Roundtable has launched its Citizen Perception Report, a first of several research reports to be published in support of its tax reform and advocacy vehicle “Better Tax”. The Fiscal Roundtable notes that Better Tax seeks to close the knowledge gap in fiscal policy and create a sustainable framework to actualise the Federal Government’s inclusive growth economic agenda.
Launched in Lagos yesterday, the Citizens Perception Report, the result of a nationwide perception survey cutting across households and small businesses along the tax value chain, tasked government to establish an Office of Tax Simplification (OTS) among other recommendations targeted at demystifying complex provisions in the nation’s tax laws and improving dwindling revenues from the non-oil sector of the economy.
Dr. Sarah Alade, Chairman, NESG Fiscal Policy Roundtable, said, the core concept of the Roundtable was to project the needs and objectives that form the basis of robust fiscal reforms focused on mobilising and growing the nation’s tax revenue.
Low Bed Non-Oil Sector Tax Contribution
The IMF estimates that revenue collected in 2016 across all tiers of Government was only about 6% of GDP. Historically, more than 70% of those revenues have come from the oil sector while the non-oil sector, which account for more than 90% of GDP, has historically contributed about 30% to revenues. “This limits Nigeria’s ability to credibly execute its development plans and fund critical social sector programmes.
It also leaves Nigeria very vulnerable to macro-economic shocks from low oil prices. The most recent fall in oil prices threw Nigeria into a fiscal crisis with spill-over effects on the economy resulting in a recession in 2016. Alade noted that, “Building a strong revenue base that is balanced between the oil and non-oil sector is therefore critical to sustainably financing Nigeria’s development programmes and long-term macro-economic stability.”
According to Alade, data from the Citizen Perception Survey reinforces the appalling level of fiscal responsibility in taxpayer education, which fuels apathy and low morale among taxpayers. She said, “beyond the general clamour for increasing revenues and the correlation with higher tax rates, there are other issues around taxpaying in Nigeria. There is the presumption that the Nigerian citizenry is apathetic to the payment of taxes, which makes the findings of the Citizen Perception Survey crucial. The findings show that Nigerians are not averse to taxpaying given proper education and expenditure transparency on the allocation and application of resources by the Government.”
A Case of Perennial Budget Holes
Fiscal Policy Roundtable Co-Chair Dr.Doyin Salami, represented by Mr Taiwo Oyedele ,PWC West Africa Tax Leader, and Research Director NESG Fiscal Policy Roundtable, said the government had been unable to meet recurrent and capital expenditures following a budget deficit of N3.8 billion and debt profile of N22.7 billion.
Mr.Oyedele, who shared evidence-based data from the Citizen Report during his technical presentation at the event, disclosed that “low tax compliance results from tax complexity, crisis of trust in the government and inadequate social contract deliverables; while tax officials were constrained by inconsistent tax policies, limited resources, unrealistic targets, and inability to influence service delivery, among others”. Citing the date from the Citizens Perceptions Reports, he said that over 70% of Nigerians believe that “it is not wrong to pay taxes”. This sentiment, is fuelled by the issues around the social contract between the government and the citizenry
During the panel discussion on “Making Taxation Work for Nigeria – Issues, Solutions and Priorities”, Prof. Teju Somorin emphasized the need for balanced fiscal responsibility between the government and the citizens. President, Manufacturers Association Of Nigeria Engr. Ahmed Mansur also emphasised the fact that tax revenues are part of the bigger issue of the missing link in the social contact between the people and the government.
Things To Come
In the next few months, the NESG Fiscal Policy Roundtable will continue to leverage Better Tax to disseminate the findings from its analysis of the fiscal space, both from the revenue and expenditure viewpoints. Better Tax will provide sustainable platforms to drive government-citizen engagement on how to effectively implement a holistic change in the country’s tax system, which will in turn achieve revenue generation outcomes for the non-oil sector of the economy.