FG to Impose Tax on Soft Drinks, Others

In a bid to increase revenue generation, the Federal Government has started working on a plan to impose excise duties on carbonated drinks, soft drinks and Value Added Tax (VAT) on other important products, the Minister of Finance, Budget and National Planning, Zainab Ahmed stated.

The minister, who was in Washington DC, USA, for the 2019 Annual Meetings of the International Monetary Fund and World Bank, said Federal Government was working on increasing revenue by introducing excise duties on certain items like carbonated drinks as well as additional VAT on imported goods.

“We are also looking at introducing excise duties on some categories of products especially carbonated drinks and VAT on some categories of imports into the country. But it is not all taxes increases, there is also a proposal to build tax rates for SMEs we also increase the minimum tax level to make it easy for people to plan their taxes,” the minister explained.

She explained that the government needs to rebuild social contract between itself and the citizens, adding that in “Nigeria we don’t have adequate social contract. The government was not asking for or enforcing tax collection and therefore taxpayers also were not taking up their civic responsibilities. This is because we are largely dependent on oil revenue and people are not used to paying taxes.

“Very recently at the Nigeria economic summit they shared a citizens survey and 75 per cent of people that were surveyed said ‘we don’t think there is anything wrong in not paying taxes and it is not a problem’ and there a few that said ‘I don’t see what the taxes are used for so why should I pay tax.’ We have a very low tax morale, we are planning a strong strategic communications process to educate people on why they need to pay taxes. Because we rely heavily on oil and it is not going to be there forever.”

Therefore, Nigeria has to increase its domestic revenue generation through an improved and broad-based tax system.

“We currently have a pervasive revenue generation problem that must change to successfully finance our development plans. Speaking to the facts, our current revenue to GDP of eight per cent is sub-optimal and a comparison of oil revenue to oil GDP and non-oil revenue to non-oil GDP performance reveals the significant area that requires immediate and dire intervention as the non-oil sector. This performance attests to the realities of our inability to efficiently and to a reasonable degree, completely collect taxes from our non-oil economic activities.

“Nigeria when compared to peers shows that we are lagging on most revenue streams including VAT and excise revenues as we not only by far have, one of the lowest VAT rates in the world but weak collection efficiencies. So also, do we have a lot of incentives and deductions that further constrain the fiscal space that are given in hope of stimulating growth of our industries and to reduce hardship for the poor and vulnerable.”