In a significant move to alleviate the burden of multiple taxation, the Presidential Committee on Fiscal Policy and Tax Reforms has recommended the cessation of 190 taxes that have been stifling businesses across Nigeria. This recommendation was part of the ‘Quick Win Report’ presented to President Bola Tinubu. The President, during a ceremony at the Presidential Villa in Abuja, gave his endorsement to the committee’s extensive suggestions on tax and fiscal policies.
The Organised Private Sector (OPS) supported the committee’s proposal and pointed fingers at state governments for the prevalent issue of multiple taxation. This over-taxation has led to increased production costs, dwindling profit margins, disruptions in the supply chain, and a decline in consumer spending. Notably, telecommunication operators voiced their concerns, stating that their sector faces over 40 distinct taxes.
Gbolahan Awonuga, the Head of Operations for the Association of Licensed Telecoms Operators of Nigeria, attributed the problem to state governments. To address these challenges, President Tinubu initiated the fiscal policy and tax reforms in August, aiming to enhance the nation’s revenue generation and business environment.
Mr Taiwo Oyedele, the Chairman of the committee, reported that the panel has advised consolidating over 200 taxes, currently paid by Nigerian businesses, into just 10. The President, in response, expressed his gratitude to the committee and assured them of his full support in reviewing and implementing the primary recommendations.
We, at Yohaig NG, believe that the move to reduce the overwhelming number of taxes is a step in the right direction. Multiple taxation has long been a thorn in the side of businesses, especially small and medium enterprises. It’s not just about the financial burden; it’s about the complexity and administrative challenges that come with managing these taxes.
The state governments, as highlighted by the OPS, play a significant role in this over-taxation. States need to understand that while taxes are a source of revenue, they shouldn’t be a tool for stifling businesses. A thriving business environment will naturally lead to increased revenue for the government in the long run.
The telecommunication sector’s outcry is a clear indication of how dire the situation is. When a sector as vital as telecoms feels choked by taxes, it’s a sign that urgent reforms are needed. The committee’s recommendation to consolidate over 200 taxes into 10 is ambitious but necessary. It will simplify the tax landscape, making it easier for businesses to comply and for the government to administer.
The President’s endorsement of the committee’s recommendations is commendable. However, endorsement alone is not enough. Swift implementation is crucial. We urge the government to act promptly on these recommendations, ensuring that businesses can breathe easier and contribute more effectively to the nation’s economy.
Did You Know?
- Nigeria ranks 131 out of 190 countries in the World Bank’s Ease of Doing Business Index.
- The Nigerian telecoms sector contributes about 10% to the country’s GDP.
- In Africa, Nigeria has one of the highest numbers of small and medium-sized enterprises, with over 37 million SMEs.
- Multiple taxation can lead to double taxation, where a business or individual is taxed twice for the same income or asset.
- The World Bank estimates that businesses in Nigeria pay up to 48 taxes.