Nigeria is reportedly losing an estimated N20 trillion annually due to tax gaps, as revealed by Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms. The committee’s goal is to achieve an 18% Tax-to-Gross Domestic Product (GDP) ratio within three years. Oyedele attributed the massive tax loss mainly to tax evasion and inefficiencies in tax collection methods.
Oyedele highlighted the need to ensure that everyone who is liable to pay taxes actually does so. He emphasized that addressing the tax gap and improving tax collection efficiency could significantly increase government revenue. The inefficiencies in the current tax collection system also contribute to the substantial tax losses.
President Bola Tinubu expressed confidence that the 18% tax-to-GDP target is achievable with improvements in the country’s revenue profile and business environment. He urged stakeholders, including the monetary sector and the public, to support the committee’s efforts. The President stressed the need to reduce Nigeria’s reliance on borrowing to finance public spending and to develop more sustainable revenue sources.
President Tinubu directed various government agencies to cooperate with the committee’s efforts and called for quick reforms and critical strategies to be recommended and implemented within a year.
Opinion: The significant tax gap in Nigeria highlights the urgent need for comprehensive tax reforms and improved tax collection mechanisms. Addressing tax evasion, streamlining tax collection methods, and increasing tax compliance could significantly boost government revenue, allowing for better economic development and reduced reliance on borrowing. It’s crucial for the government to work collaboratively with stakeholders and experts to create an effective tax system that promotes transparency, fairness, and accountability while contributing to the nation’s sustainable growth.