In a compelling session before the House of Representatives Committee on Appropriations on Monday, the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, emphatically denied any plans for an increase in current tax rates.
Edun addressed concerns raised by lawmakers regarding the potential escalation of tax rates, assuring them that the government’s focus is on broadening the tax bracket to include more individuals and entities.
Edun articulated, “There is no plan for an increase in the tax rate as such. The plan is to increase the revenue from taxation.”
He highlighted the government’s ambition to elevate taxation returns as a percentage of the tax-to-GDP ratio from the existing nine percent to 18 percent within a three-year timeframe, aligning more closely with the African average.
The Finance Minister outlined a strategic approach that diverges from merely raising tax rates, emphasizing the importance of collection efficiency.
He explained that the government aims to optimize revenue collection, fostering an environment conducive to private-sector investments.
Edun went on to reveal the government’s intentions to reduce tax rates when necessary, intending to incentivize private-sector investments crucial for economic growth.
“The emphasis is on raising revenue. Government spending as a percentage of GDP is very low,” Edun noted, drawing attention to the disparity between government spending in Nigeria and developed nations.
He stressed that the government intends to address this gap by increasing spending on infrastructure and social services.
Furthermore, Edun provided insights into the current fiscal landscape, indicating that approximately one percent of the country’s GDP is allocated to tax incentives, import duty waivers, and other concessions.
This disclosure shed light on the government’s broader strategy to strike a balance between revenue generation and facilitating economic development through targeted fiscal policies.
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