Amid Nigeria’s challenges in income generation, experts have emphasized the need for the Federal Government to expand its tax net to include the informal sector and unregistered businesses. This recommendation was made at the Detail Tax Business Series program, where experts discussed the implications of the Finance Act 2023 on the country’s tax and fiscal outlook.
The panel of experts, including representatives from PwC Africa and KPMG Nigeria, stressed the importance of increasing the number of individuals and citizens in the tax net, rather than solely focusing on raising tax rates. They suggested that tax authorities should concentrate on taxing individuals in the informal sector and businesses that are not registered, thereby broadening the revenue base. The experts also highlighted the significance of greater collaboration among authorities in achieving this goal.
The experts advised the government to prioritize the taxation of consumption rather than production. This shift, they argued, would promote economic development and help curb inflation.
Given the challenges faced by business owners, including multiple taxes and infrastructural deficiencies, the panelists recommended that the government and tax authorities consider streamlining or consolidating existing tax laws to address the issue of multiple taxation.
To simplify the process of tax payment, the experts suggested that tax authorities explore the benefits of implementing a single tax collection agency at both the federal and state levels. This approach has proven successful in Kaduna State.
Additionally, the panelists emphasized the need for a comprehensive re-orientation of citizens, starting at the family level, to cultivate a culture of tax payment and compliance.
By broadening the tax net, optimizing tax collection methods, and encouraging responsible tax practices, the experts believe that Nigeria can significantly enhance its revenue base and address the economic challenges it currently faces.