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FG to Name and Shame Tax Defaulters

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Federation Account Allocation Committee
  • FG to Name and Shame Tax Defaulters

The Minister of Finance, Mrs. Kemi Adeosun, yesterday said the federal government might adopt name-and-shame strategy to expose tax defaulters in the country, just as she decried the fact that only 13 million persons pay tax in Nigeria.

According to Adeosun, out of the 13 million taxpayers, 12.5 per cent are those who pay Pay-As-You-Earn (PAYE).

Adeosun said this while addressing journalists at end of the IMF/World Bank spring meetings in Washington DC.

The Nigerian delegation at the meetings included the Central Bank of Nigeria (CBN) Governor, Mr. Godwin Emefiele, the Minister of Budget and National Planning, Senator Udoma Udo Udoma, Minister of Power, Works and Housing, Babatunde Raji Fashola and nine National Assembly members.

Adeosun however, said the government does not intend to introduce new taxes, saying the government would in the coming days enforce compliance aggressively.

“We have about 13 million tax payers in Nigeria and about 12.5 millions are those who have their taxes deducted. Are we saying all the wealth and self-employed are only 500,000? This is not possible. We are going to be more aggressive on tax collection. We are not witch hunting anybody but because we have to redistribute income from the higher to the lower. Those who have been able to get away with it over the years know that the game is up.

“The job of the government is to ensure that it is very difficult to evade tax, we’ve already stated that job. We are gathering data and statistics of over 800,000 companies have been gathered and registered. How was that done? We simply went to the Corporate Affairs Commission (CAC).

“Nobody wants to pay tax, so we are going to make it more difficult for people to evade taxes. At every data point of government, we would be picking up data to compare tax. The other thing is there is going to be much more better cooperation from the international community and that is one of the things we have been discussing here in Washington, because a lot of money has left Nigeria,” she explained.

But, the minister said moral suasion would also be used in the process of tax enforcement.

Responding to a question on the huge amount of funds recovered by the Economic and Financial Crime Commission (EFCC) in the last two years, the minister said a central recovery account had been created. Adeosun emphasised that the government was keeping its “eyes on the recoveries.”

According to her, “All the recovered monies go into the recovery account which we reconcile. Now, in the budget, there was the provision that some recovered monies would go into it and that goes into specific projects in the budget and any excess recoveries we have to wait and take some decisions.

“So far, we have not recovered up to the amount we are expecting in the budget. But what we are trying to do is to make sure that there are controls. That was why we created a central recovery account.

“What we also discovered is that so many agencies are recovering and we must keep and eyes on those recoveries, otherwise there is the risk of re-looting.

“So all the agencies that recover send us their returns monthly, we then sweep it into a central account which is kept by the accountant general, so that we can reconcile,” she said.

Furthermore, Adeosun said the meeting on the power sector recovery plan was positive.

“The multilateral agencies have looked at the plan we have put together and they liked it because, as they said — it is realistic. We have really dimensioned all the issues from the Gencos to Discos, to end users, to metering,and one thing that everybody is very clear of, is that it is a big problem.

“So it is a large problem that will take some time to solve, but the most important thing is that there are milestones of what we are expecting to see. The multilateral agencies have pledged their support financially, becauuse those investments are tied to certain results.”

From the impression I got yesterday from those meetings, they were optimistic that if we actually implement what we have planned, and the Minister of Works and Housing was very emphatic that he is going to drive the implementation. I feel quite optimistic that it is realistic.

“We are not saying throw away your generator by December, it is a realistic plan, but it is going to take time. If we have power, a lot of factories that have closed down can re-open. So, it ties with our Economic and Recovery Growth Plan,” she added.

According to Adeosun, the World Bank is also going to provide finance for small businesses run by women in Nigeria.

Report by Kunle Aderinokun, Obinna Chima, Funke Olaode, Kasie Abone and Nosa Alekhuogie, in Washington DC.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

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Economy

World Bank Calls on Nigeria to Impose Special Taxes on Alcohol and Tobacco

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The World Bank Group has made a call to the Federal Government of Nigeria, urging the government to impose special taxes on alcohol, cigarettes and beverages that are highly sweetened in order to improve primary healthcare conditions in the country.

Shubham Chaudhuri, who is the Country Director for Nigeria in the World Bank Group, said that an improvement in healthcare in Nigeria will come by taxing the things that are “killing us.” He said that the economic rationale for the action is quite strong if lives are to be saved and a healthier Nigeria achieved.

Chaudhuri made the call on Friday, at a special National Council on Health meeting which was organized by the Federal Ministry of Health in Abuja. Chaudhuri stated that placing special taxes on tobacco, sweetened beverages and alcohol would reduce the health risks which come with their consumption and expand the fiscal space for universal health coverage after COVID 19.

The country director also said that investing in stronger health systems for all would make significant contributions to the fight against inequality and the rising poverty situation in the country. He went on to add that increasing health tax would provide an extra advantage of reducing healthcare cost in the future, by hindering the growth of the diseases which are caused by tobacco, alcohol and sugar-sweetened beverages.

The representative of the WHO in Nigeria, Dr Walter Mulombo said that he could confirm the large health needs of Nigerians, as well as the efforts being made to meet those needs. He said this was based on the fact that he had been to over half of Nigeria’s states in less than two years of being in the country.

Mulombo then noted that although the coronavirus exposed weaknesses in the global economy (not excluding health), it could be considered as a unique opportunity for a thorough examination of existing resources and mechanisms to prepare for a more resilient future.

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Economy

Nigeria’s VAT Revenue Falls to N500 Billion in Q3 2021, Manufacturing Sector in the Lead

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Value added tax - Investors King

In the third quarter of 2021, Nigeria generated a total sum of N500.49 billion as value-added tax which represents a 2.3% decline when compared to the N512.25 billion recorded in the second quarter of the year.

This is as seen in the VAT report which was recently released by the National Bureau of Statistics (NBS). The report revealed that the manufacturing sector was in the lead as it remitted a total of N91.2 billion, representing about 30% of the total local non-import value added taxes in that period.

In spite of the quarter-on-quarter decline of VAT collections in the reviewed period, it grew by a further 17.8% when compared to N424.7 billion generated in the same period of the previous year. The report also shows that an amount of N1.5 trillion has been generated from value added taxes from January 2021 to September 2021.

That is 40.2% higher than the N1.08 trillion recorded in the same period of 2020, and 72.3% higher than what was recorded in the same period of 2019.

To break it down, the Value Added Tax collected in the first, second and third quarter of 2021 was recorded at N496.39 billion, N512.25 billion and N500.49 billion respectively. It is higher than the corresponding figures of 2020, which sat at N324.58 billion, N327.20 billion and N424.71 billion for the first, second and third quarters respectively.

In the third quarter of 2021, the Manufacturing activity accounted for the largest share of total revenue collected across sectors, with a huge 30.87% (N91.2 billion) coming from that sector. The Information & Communication sector came in second with 20.05% (N53.9 billion) contributed, while the Mining & Quarrying sector came in third with 9.62% (N28.4 billion).

Nigeria has continued to ramp up its efforts to increase revenue from non-oil sectors by increasing its tax collection rates, which has recorded largely significant growth since the federal government increased the VAT rate from 5% to 7.5% in the 2019 Finance Act, which was signed and made effective in 2020.

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Economy

Nigeria’s Economy to Close 2021 at 2.5% Growth Rate

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Trade - Investors King

The Lagos Chamber of Commerce and Industry (LCCI) has predicted that the Nigerian economy will close its growth rate for the year at 2.5%.

This was said by the President of the LCCI, Toki Mabogunje at the 133rd Annual General Meeting (AGM) of the chamber in Lagos on Thursday, as reported by the News Agency of Nigeria.

The LCCI leader advised that Nigeria’s monetary and fiscal aspects of the economy should encourage policies that enhance growth and build confidence which would invigorate private capital flows to the economy to achieve the growth. She also encouraged a medium-term recovery plan which is anchored on local productivity, attracting private investment, developing physical and soft infrastructure, and ease of business.

Mabogunje disclosed that Nigeria’s inflation would be maintained at its double digit level within the short to medium term, due to food supply shocks, foreign exchange illiquidity, higher energy cost, social unrest in the Northern region, possible removal of fuel subsidy, and insecurity. She stated that these structural factors will keep on mounting pressure on domestic consumer prices.

She also added that in spite of the non-oil economy’s growth by 5.4%, insecurity problems in some areas of the country may lead to shrinking in production and a disruption of the supply chain. She states that the important drivers of the non-oil sector growth were finance and insurance holding 23.2%, transport and storage 20.6%, trade carrying 11.9% and telecommunications 10.9%.

Others include manufacturing, construction, real estate and agriculture with 4.3%, 4.1%, 2.3% and 1.2% respectively throughout the year.

Speaking on the decision of the Central Bank of Nigeria’s Monetary Policy Committee’s decision to retain policy parameters, she mentioned that although the apex bank has been keen to extend credit to the real economy as a way of supporting it, it is a fact that the provision of credit recently has proven ineffective in improving output growth and stabilizing consumer prices.

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