Raising revenue to fund government salaries, infrastructure projects and public services is one of the core tasks of any state. However, a narrow tax base has always undermined the prospects for revenue generation, obviously leading to difficulty in the management of the economy. Economies would always proposed different tax drive initiatives that could bring about the needed change for revenue generation.
Therefore, the launch of the Federal Government’s Strategic Revenue Growth Initiatives (SRGIs) by Mrs. Zainab Shamsuna Ahmed, Honourable Minister of Finance, Budget and National Planning, had shone some light on the Nigerian situation of low revenue generation capabilities. At the launch, Ahmed had admitted that: “We have faced difficulty in mobilising domestic funds necessary for human capital development and infrastructure that are both drivers of sustainable economic growth. Our current revenue to GDP ratio of about seven per cent is unsatisfactory and we are keen on exerting all efforts in turning this around.”
In order to address the problem and make it possible for the revenue generation initiatives to gain fruition, the Joint Tax Board (JTB) recently had its 14th meeting in Abuja themed: ‘Stakeholders collaboration in expanding the tax base leveraging on existing database,’ at which there was a Communiqué issued and signed by both Mr. Tunde Fowler, Chairman of the Board, and Mr. Oseni Elamah, Secretary of the Board.
The revenue authorities in Nigeria should pursue collaboration and constructive partnership with relevant agencies in a bid to grow the national taxpayer base, and as well consider the need to continually collaborate and engage with relevant stakeholders to achieve expansion of the tax data base, according to the Board.
In the Communiqué the Board resolved that States should make every effort to implement the Class ‘A’ Driver’s Licence and ensure that all motor vehicles, motorcycles and tricycles are duly registered. “States should ensure that data derived from the registration of motor vehicles, motorcycles and tricycles are regularly uploaded on to the National Vehicle Identification Scheme (NVIS) platform,” it was resolved.
The Board reiterated the position that “the enforcement of the new vehicle number plates shall commence with effect from 1st January 2020 upon the expiration of the one-year period of grace granted for the replacement of old vehicle number plates.”
In line with the provisions of the Personal Income Tax Act (as amended), the Board mandated the State Revenue Authorities, under the aegis of the State Joint Revenue Committee, to engage with the relevant authorities of Local Government Councils and all relevant stakeholders to elicit the buy-in on the implementation of the unified sticker/emblem and ultimate eradication of all forms of unauthorised sale of stickers/emblem nationwide. It was also resolved that revenue authorities at the national and sub-national levels should continue to consolidate on existing initiatives as well as design and implement new ones that will ensure consistent and sustainable revenue growth.
The imperative of the Federal Government’s new tax direction and revenue generation initiatives stem from the fact that the current fiscal climate and revenue performance leaves huge abyss, more so looking at it from the point of view of the Economic Recovery and Growth Plan (ERGP). The situation is not helped either by the very fluctuating figures of current contributions of oil to the GDP.
According to Ahmed, “Nigeria has the lowest Value Added Tax (VAT) among her peers. In addition to having one of the lowest VAT rates, experts are united in their views that Nigeria has one of the lowest tax-to GDP ratios (about seven per cent), an uncomplicated indication of the systemic inefficiency and failure to adequately mine the tax-generating capacity of the economy. It is against this background that the proposed new tax direction, especially the increase in the rate of VAT for luxury items, becomes imperative.”
Considering that revenue growth is a strategic priority for the Ministry of Finance, Ahmed believes SRGI is a key aspect of government strategy to improve Non-oil revenue through fiscal buffers, and ultimately improve the Revenue to Debt Service Ratio and to improve the ratio of Non-oil revenue to Non-oil GDP.