- Tax Collection: We Must Step Hard on Big Toes
The Minister of Finance, Mrs. Kemi Adeosun has said the Federal Government will have to step on big toes in a bid to block tax revenue leakages and illicit flow of funds out of the country.
Adeosun stated this on Friday while delivering the keynote address at the NSE-Bloomberg CEO roundtable in Lagos.
She said, “We have just 40 million active tax payers out of an estimated 69.9 million who are economically active in Nigeria. And of that 40 million, the majority are PAYE (Pay As You Earn), that is those who have their tax deducted at source.
“Among those who are even paying tax, there is widespread malpractice that results in only part of the actual income being subjected to tax.”
She noted that the Federal Executive Council on Wednesday granted permission for the ministry of finance to sign the global convention on base erosion and profit shifting that allowed companies who generate profits in Nigeria to evade taxes by shifting these profits to countries or jurisdictions where little or no tax was payable.
“These practices harm Nigerians and must stop,” said the minister who described the nation’s tax to Gross Domestic Product ratio of six per cent as one of the lowest levels in the world.
She said, “We have a lot of work to do if we are going to build a sustainable revenue base that we deliver the growth we desire. Even within our tax-paying community, only 214 people in the entire nation pay tax of N120m in spite of having some of the richest people in Africa and some of the best-capitalised companies in Africa; only 214 in the entire country, all of which are in Lagos State.
Adeosun said the issue of tax evasion must be addressed aggressively for the country to grow.
She said, “And to do so, we will have step on some big toes, and we will need to step on them hard. But we really have no choice. For the size of government we have, the size of country we have and the needs we have, government revenue is simply too low.
“Those who have more must carry their fair share of the tax burden, and so to this end, for the last 15 months, we have engaged in a huge data-gathering exercise.”
She said one of the world’s leading investigation agencies was engaged, adding that funds originating in Nigeria to all parts of the world had been traced.
“The illicit flow of funds out of Nigeria harms our nation; it deprives us of essential funds and those same funds are then used to finance development in other nations. This must stop,” Adeosun added.