Financial experts have thrown their weight behind the Federal Government’s proposal to tax wealthy Nigerians, describing it as a progressive measure that can promote income redistribution and boost the country’s fiscal revenues.
In separate interviews, the experts lauded the government’s initiative, saying it was a step in the right direction towards ensuring a more equitable tax system.
Form of progressive tax: Dr Muda Yusuf, Chief Executive Officer of the Center for the Promotion of Private Enterprise (CPPE), said the proposal was a welcome development.
- “This approach is a form of progressive tax because high net-worth individuals are expected to pay more taxes,” he said.
- “It is a means of income redistribution and a common practice in most civilized countries where there is economic development,” Yusuf said.
- He condemned a situation where wealthy citizens do not remit the right percentages of taxes to the government authorities.
- “Their tax remittance is not commensurate to their net worth and affluence lifestyle. They often short-change the government,” Yusuf said.
Constitutional: The former President of, the Chartered Institute of Taxation of Nigeria (CITAN), Dr Mc-Antony Dike, described the government proposal to tax wealthier citizens as constitutional.
Dike said, “Our tax laws dictate that every Nigerian who earns an income whether legitimately or otherwise must pay their tax.
- “Indeed, the Personal Income Tax Act 2011, as amended, removed the exemptions it granted to the president of the Federal Republic of Nigeria”, adding anybody who earns legitimate income legitimately or must pay tax.”
- He noted that rich Nigerians who do not pay taxes were denying the government the revenue to provide public utilities for the citizens.
- “As a matter of fact, a country like South Africa has demonstrated greater tax compliance culture, than we have in Nigeria.
- “Indeed, before the advent of Value Added Tax in South Africa in the late 1990s, personal income tax contributed close to 60% of total tax collection in that country,” Dike said.
Novel initiative: Also, the President Standard Shareholders Association of Nigeria, Mr. Godwin Anono, said the federal government’s proposal to tax more wealthy Nigerians was a novel initiative.
“The planned policy is a sort of reduction of economic inequality in our society.
- “Where the elite are expected to take care of the economically vulnerable citizen through its taxes,” Anono said.
He advised that the federal government should employ technology to bring more eligible taxpayers into the tax net.
What you should know: The Federal Government has stated its plan to begin taxing wealthy Nigerians to achieve its 18% Tax-GDP ratio revenue target.
This was disclosed by Mr. Taiwo Oyedele, Chairman, of the Presidential Committee on Fiscal Policy and Tax reforms.
Mr. Taiwo noted that the move was part of President Bola Tinubu’s reforms as the federal government aims to achieve an 18% tax-to-GDP ratio within three years.
According to him, the plan is to enable the rich to pay more tax in favour of the less privileged.
Taiwo also envisages a reduction in the corporate income tax rate below the current rate of more than 40% to help boost business.
