The Nigerian Economic Summit Group (NESG) launched the Better Tax initiative on May 15th in Lagos. The initiative seeks to close knowledge gaps in fiscal policy and create a sustainable framework to actualise the Federal Government’s inclusive economic agenda.
The IMF estimates that revenue collected in 2016 across all tiers of Government was only about 6% of GDP. Historically, more than 70% of those revenues have come from the oil sector while the non-oil sectors, which account for more than 90% of GDP, have historically contributed about 30% to revenues. Dr. Sarah Alade, Chairman of the NESG Fiscal Policy Roundtable, said:
“This limits Nigeria’s ability to credibly execute its development plan and fund critical social sector programmes. It also leaves Nigeria very vulnerable to macro-economic shocks from low oil prices. The most recent fall in oil prices threw Nigeria into a fiscal crisis with spill-over effects on the economy resulting in a recession in 2016. Building a strong revenue base that is balanced between the oil and non-oil sector is therefore critical to sustainably financing Nigeria’s development programme and long-term macro-economic stability.”
Mr. Taiwo Oyedele, PWC West Africa Tax Leader and Research Director of the NESG Fiscal Policy Roundtable, said the government had been unable to meet recurrent and capital expenditures following a budget deficit of N3.8 billion and debt profile of N22.7 billion. He shared data from the Citizen Perception Survey, which demonstrates the low tax morale among Nigerians. For example, more than a fifth of Nigerians believe it is “not wrong at all” to not pay income taxes.
During the panel discussion on “Making Taxation Work for Nigeria – Issues, Solutions and Priorities”, Prof. Teju Somorin emphasized the need for balanced fiscal responsibility between the government and the citizens. President of the Manufacturers Association Of Nigeria, Engineer Ahmed Mansur, also emphasised the fact that taxation is crucial in the social contract between citizens and the government.
Through Better Tax, The NESG Fiscal Policy Roundtable will continue to facilitate engagement between citizens and the government in order to improve the country’s tax system.