The International Monetary Fund (IMF) has urged Nigeria to pursue aggressive tax reforms, encouraging the Federal Government to cut down on its tax exemptions.
The Assistant Director of IMF‘s Fiscal Affairs Department, Ms Catherine Pattillo, speaking during the IMF Fiscal Monitor Report release press briefing, at the ongoing IMF/World Bank Group spring meetings in Washington DC, United States, recommended that the Nigerian government needs to change the way taxes are being collected in the country.
According to her, Nigeria’s excise taxes should be raised and expanded. “there is an emphasis also on improving excise taxes. And I think there have been some steps in that direction, but there is scope for the coverage of excise to other goods and also higher rates on excises,”.
“Another area is aggressive streamlining of tax incentives and exemptions. So there has been in Nigeria an effort with the strategic revenue growth initiative, looking at the comprehensive approach to tax reform, and this is very welcome,”.
The Washington based organization wants Nigeria to cut tax exemptions and incentives due to the poor contribution of the non-oil sector to the Gross Domestic Product sector of the economy. According to the IMF, Nigeria’s non-oil revenue to GDP is currently at about 3.4 per cent, which is one of the lowest in the world.
IMF recommended that to improve the non-oil revenue to the GDP, Nigeria has to undergo tax reforms.
Ms Pattillo further added that “The reason why that is needed is that Nigeria has one of the lowest ratios of non-oil revenue to GDP at around 3.4 per cent in the world and the total tax revenue to GDP of around 8 per cent is also low compared to its peers.”