We are developing dynamic tax system to fund budgets – Buhari


President Muhammadu Buhari, yesterday, explained the nation was developing a dynamic tax system that would become formidable source of funding government budgets and programmes as parts of the administration’s efforts to diversify the economy from over dependence on oil. Buhari, who disclosed this while declaring open the 18th annual tax Conference, organised by the Charted Institute of Taxation of Nigeria, CITN, in Abuja, said, regretted that over dependence on the oil revenue in the recent past was the root causes of our current situation. Kemi Adeosun The President, who was represented by the Minister of Finance, Mr. Kemi Adeosun, however reassured that the administration has developed a comprehensive and realistic strategy to solving the problem. According to Mr. President, “More importantly we have developed a comprehensive and realistic strategy to solving the problem in a sustainable way that will build term opportunity and prosperity for our people. “Once the current oil price is low it is instructive to note even when the oil prices reached historic height of as much as $115 per barrel, Nigeria did not significantly benefit in terms of economic growth and this could largely be attributed to a number of factors which includes but are not limited to corruption, wastage, inefficient spending as well as revenue leakage. “Oil revenue was an effective anesthetic that have skilled the effects of fundamental weaknesses in our public financial management which we must now addressed. The low level of tax  revenue in Nigeria 7%  is a key factor in and also a symptom of our fundamental over reliance on oil that has resulted in the physical imbalance that are now manifesting. “It is therefore an appropriate decision by the chartered institute of taxation to theme this year’s conference physical challenges and opportunities in the Nigerian economy. “In preparing for this event I carefully read the communiqué arising from the last tax conference held last year and I acknowledge the remarkable insight of the diagnosis that “Nigeria is experiencing growth without development” and I would with your permission frame my comment of the recommendations made last year to the government by this institution and identify how to address them. “These were your recommendation to the government and I summarise: Government was advised to redraft the tax laws and in particular to amend areas of the company’s incomes tax that now impose double taxation. To remove the minimum tax requirements that potentially forces loss making companies to pay tax from capital. “To establish a tax court and to improve legal backing for the joint tax board, to create physical incentives for investments in oil and gas and to enhance local refining capacity by revitalizing our refineries. “To enhance financial control in the public sector and to widen the tax space. I think the CITN set out very clearly the physical priorities to underpin our economic agenda in a very concise manner. I will explain briefly our road map for the attainment of these objectives. “We believe that a robust tax system is a prerequisite for any economy that is serious in its commitment to growth and development. Tax collection must grow in line with growth in the economy. But sadly this has not been the recent case in Nigeria and this is our challenge. “Our tax system must reflect the nature of our commercial activities levels. Oil I 13% of our GDP level but it represents a disproportionate share of our tax revenue. The challenge is the other 87% of our GDP why is it contributing so little to government revenue. We will therefore develop a framework that would mobilize revenue from the non oil sector. “Our tax system must be dynamic in order to respond to an ever-revolving economic landscape and to increasingly technology driven modules. “As part of our drive to increase non oil revenue, we are setting an aggressive target for increasing for tax collection, this is a reflection of the fact that the current level of compliance is very low and in some cases where there is compliance the effective tax rate paid is lower than expected. “An overhaul of our tax code is long overdue as well as the re-drafting of our tax laws to reflect the current business practices and new trends. We must respond to the growing phenomenon of base shifting and other practices that allow companies to be evade their fiscal and legal responsibilities. “We will critically examine our GDP to align taxes with economic activities with the ability to block leakages. For example the multi billion naira losses current identified in our solid minerals sector, by illegal and undocumented miners will be addressed,” he said. In her address, the President of FCTI, Dr. olateju Abiola Somorin said the nation must push forward with reform and initiatives that would bring about an efficient tax system that is fair to all and without prejudice to none. She added that, “The tasks of ensuring more balanced fiscal structure within which taxation becomes a formidable source of funding government budgets and programmes is key. Let us rise from this conference and continue to look beyond oil. Clearly, there are alternatives to oil. Taxation is a key alternative.” She said however that there is urgent need for tax reforms and review the nation’s tax law, adding, “A review of some of the Nigeria’s tax laws has indeed become overdue if the country hopes to rake in substantial revenue from taxation. “Moreover, sustainable economic growth cannot be attained with tax reform.  Only without review of obsolete tax laws and tax rates in consonance with macro economic objectives and efficient tax administration machinery. “However, there seems to be light at the end of the tunnel because the Nigerian GDP has been projected to hit 6.4 trillion dollars by 2050 according to report by Princewaterhousecoopers ‘Nigeria looking beyond oil’. “The report added that, when this is achieved Nigeria will move to the 9th position on the world ranking and will probably surpass developed countries like France, Germany and United Kingdom. We need to diversify Nigeria’s over dependence on oil to achieve this feat.  Nigeria has to transit essentially to non-oil economy.”