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Nigeria’s tax potentials remain untapped – Governor El-Rufai

Governor El-Rufai has lamented FG’s inability to maximize tax potentials in relation to tax collection and revenue.

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Nasir El Rufai, Milk production, El Rufai, El-Rufai opens Kaduna state borders, Nigeria’s tax potentials remain untapped- Governor El-Rufai

Governor Nasir El-Rufai of Kaduna state has decried the inability of the Federal Government to maximize tax potentials, especially as it relates to tax collection and revenue.

The disclosure was made on Thursday by the Governor in a keynote address he delivered at the 22nd Annual Tax Conference of the Chartered Institute of Taxation of Nigeria (CITN), held in Lagos, with the theme: “Taxation and Economic Competitiveness: Imperatives for National Development – a Nigerian Subnational Perspective.”

In the view of Gov. El-Rufai, this untapped tax potential is the bane of a flawed provision of social goods and physical infrastructure, which largely depends on revenue generated through taxes and other sources.

The Governor noted the considerable resistance to the hike in VAT from 5% to 7.5%, and opines that Nigeria’s rates are still much lower than other neighbouring countries.

He also emphasized the need to block tax leakages which drains government revenue, noting that leakages may occur at the stage of revenue generation, by wrong assessment or no assessment of taxpayers. He further lamented that only a minority of taxing citizens pay income tax in Nigeria.

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What they are saying

Buttressing his points further, the Governor said, “With national tax revenues (oil and non-oil) still less than 7 percent of GDP, Nigeria is way behind the average of comparator nations of about 20% of GDP. As the world goes green, and crude oil loses its primacy as a leading source of energy, Nigeria must look inwards and compel every adult to pay tax as part of our citizenship obligation.

“In light of the situation that we are, we have very few options other than to develop our capacity to collect to broaden the tax net, assess and collect taxes from individuals and companies to levels of our comparator nations – at least 20% of GDP within the shortest possible timeframe. As political leaders and tax professionals, we must put our collective heads together to ensure this national objective is achieved as soon as possible.”

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Commenting on what his regime is presently doing about Tax in Kaduna state, the Governor said, “There has been a steady rise in revenue collection in Kaduna State within the last four years. We have increased our revenues from N23bn in 2016 to N44.9b in 2019, an increase of N21.9bn.

“To appreciate this journey, it is important to recall that revenue collection in 2015 was N13.55bn. Our government had nearly doubled this by 2017, prior to the great leap forward in 2019, all this without hiking tax rates.”

What you should Know

Nairametrics had earlier reported that the increase in VAT collection increased by a decent 22.9% y/y to N1.1tn in 9M 2020 from N876.1bn in 9M 2019.

Why it matters

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The role of tax in national development cannot be over-emphasized, as it acts as a major source of government revenue. The revenue will be used to provide basic amenities to the people. Empirical studies have also shown that the use of a fiscal tool such as tax is imperative in building national competitiveness, as lower tax rates attracts more foreign investment and boosts national production.

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2 Comments

2 Comments

  1. Anonymous

    November 6, 2020 at 3:01 pm

    Government has no moral right to demand taxes when the government has maliciously wasted and consumed budget it could have used to develop infrastructure and human capital. The people cannot give what they dont have

  2. Anonymous

    November 7, 2020 at 4:33 am

    I wonder the face this our government will keep when driving for tax from the citizens when all they do is to put most of the money in their personal pocket. The populace will be glad to pay tax when they can see positive ventures from government as

    outcome of the already paid tax. Let there be transparency.

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Business

Nigeria’s inflation rate to moderate by first half of next year

The CBN has assured Nigerians that the country’s inflation rate will begin to moderate by the first half of 2021.

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The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has said that Nigeria’s inflation rate which stood as high as 14.2% in October is expected to begin to moderate by the first half of next year.

This is as the Federal Government had introduced a number of measures to help stabilize the economy, increase productivity and ensure recovery from the devastating impact of the coronavirus pandemic.

This disclosure was made by Emefiele during his presentation at the 55th Annual Bankers Dinner organized by the Chartered Institute of Bankers in Lagos on Friday.

The CBN Governor pointed out that inflationary pressure persisted during the year due to several factors which include disruption to global and domestic supply chains due to Covid-19, increase in the VAT rate, increase in petroleum prices, electricity price adjustments and farmer-herder clashes.

It also includes exchange rate adjustment and flooding that occurred in many parts of our farm belt areas.

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Emefiele in his statement said, ‘’Inflation in October 2020 stood at 14.2%. we, however, expect inflation to begin to moderate by the first half of 2021 as efforts are being made to enable significant cultivation and production of key staple items during the dry season.’

It can be recalled that at the 26th Nigerian Economic Summit, the Minister for Finance, Budget and National Planning, Zainab Ahmed, also said that the country is expected to exit from recession by the first quarter of 2021 with the Federal Government working towards reversing the declining economic trend in the country.

What you should know

The National Bureau of Statistics (NBS) had announced that the country had entered its second recession in 5 years in the third quarter of this year, as the Gross Domestic Product (GDP) fell for the second consecutive quarter.

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According to figures released by the Nigeria Bureau of Statistics (NBS), cumulative Gross Domestic Product (GDP) for the first nine months of 2020, therefore, stood at -2.48%, just as it recorded a -6.10% in the second quarter.

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Business

ASUU says union has not yet agreed to call off strike

ASUU has denied media reports that the union agreed to call off its 8-month old strike action.

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ASUU gives conditions to call off its nationwide strike action

The Academic Staff Union of Universities (ASUU) has denied media reports that the union agreed to call off its 8-month old strike action.

There was a bit of relief when news emerged that the strike action has been called off, after the latest meeting between ASUU top echelons and the Federal Government negotiation team, led by the Minister of Labour and Employment, Senator Chris Ngige, on Friday.

According to a report from Vanguard, the ASUU President, Prof. Biodun Ogunyemi, said he is not aware of any agreement to call off the strike. However, he noted that it was agreed at the meeting that the union would convey government’s message to their various organs and then report back to the government.

Ogunyemi said, “I am not aware of that. All I know is that we had a meeting and we are going to report to our members. But, I don’t know about suspension of the strike.”

It was also reported that ASUU reached an agreement with the Federal Government after the latter increased its offer for Earned Allowances and funding for the revitalization of public universities from N65 billion to N70 billion.

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However, ASUU in a tweet insisted that the funding should be implemented before the union suspends its strike action.

What you should know

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Nairametrics earlier reported that ASUU had called off its 8-month-long strike. It said that the union took the decision after it agreed to accept government’s total payment of N70 billion and that the payment of their outstanding salaries must not be done through the Integrated Personnel Payroll and Information System (IPPIS).

ASUU embarked on strike in March 2020, following its disagreement with the Federal Government over the funding of the universities and implementation of the IPPIS, which according to the union, negates the autonomy policy for the universities.

ASUU, however, has its own developed and preferred payment platform, University Transparency and Accountability Solution (UTAS), which the government said it is looking into.

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Export of our products in West African sub-region now less competitive – MAN

President of the Manufacturers Association of Nigeria has lamented the less competitive nature of made-in-Nigeria products.

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Dangote group, CBN unification of exchange rate a welcome development-MAN

The export of made-in-Nigeria products in the West African sub-region has become less competitive according to the President, Manufacturers Association of Nigeria (MAN), Mansur Ahmed. He made this remark in a statement seen by Nairametrics.

According to Ahmed, MAN members are losing market share daily to other African countries due to the closure of the border, as the sub-region has now become less competitive.

READ: Finance Bill: No plans to increase tax — FG

READ: AfCFTA: Nigeria’s borders to remain closed till we can trust our neighbours- Trade Negotiator

He said,

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Major manufacturers of beverages, polypropylene bags, tobacco, cement, toiletries, and cosmetics industries were losing markets they had worked very hard to secure in the West and Central African region.

“These manufacturers were hoping to leverage their market share to secure a strong position in the African Continental Free Trade Area, which kicks off in January 2021.

READ: Nigerians pay heavy price as laptop scarcity bites harder

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“Since the closure, the association has conducted a research with its members, the outcome is that some sectors had considerable increase in their productivity, while some sectors recorded sharp decline.”

He emphasized that the export group of the association clearly suffered huge losses due to logistics issues occasioned by the closure, as it takes an average of 8 weeks for the carriers to ship and truck goods within countries in the same region vis-à-vis trucking through the land border, which takes an average of 7 to 10 days.

READ: Afreximbank’s African commodity index dips by 1% q-o-q in Q3 2020

The increased traffic through our seaport as a result of the closure has increased the perennial congestion at the Apapa and Tin Can Island Ports, leading to greater challenges for exporters and increased demurrage cost, as well as other port levies,” he added.

READ: Coalition of African lawmakers seeks debt relief for African states

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What it means

Nigeria’s President Buhari recently signed the Africa Continental Free Trade Agreement exposing local Nigerian manufacturers to the regional competition.

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  • Whilst border closures impact positively on local markets due to restrictions on imports, it is unhealthy for local businesses looking to export across borders to regional African countries.

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