The World Bank has said that Nigeria needs to have fundamental tax reforms to stimulate the country’s economic growth post-pandemic.
This was shared in a report by the Washington-based financial lender themed, ‘Resilience through Reforms.’
It noted that although Nigeria’s GDP was the largest on the African continent, its tax-to-GDP ratio was the lowest.
Nigeria, according to the World Bank, would need to implement a more strategic system for revenue mobilisation, adding that the country should not just tax more “but taxing better”.
It said, “This calls for a carefully calibrated set of policy and administrative measures that can grow revenues without discouraging investment.
“That rules out any increases in traditional ad valorem taxes like the value-added tax but it does afford an opportunity to fully apply tax policies already adopted and reform tax administration to seal compliance gaps.
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“In the longer term, fundamental reforms of the tax system will be necessary to stimulate post-pandemic investment and economic growth. As Nigeria tries to “build back better” after the
COVID crisis, a more strategic approach to revenue mobilisation will also be necessary: not just taxing more, but taxing better; not just how much to collect, but how to collect, what to collect, and from whom.
“The higher share of people working was more concentrated among women and people from poorer households, which indicates an ‘added worker effect,’ more members take on work to help the household to cope with economic shocks.
“Moreover, the commerce and service sectors have expanded beyond what would be expected given previous seasonal patterns, especially for women.
“Accompanying these labor market shifts, incomes for some households have increased since before the crisis, although this is far from universal. Yet even if incomes are stabilising, households are feeling the impact of rising prices, which erodes their purchasing power and means that food insecurity is still widespread.”
