The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, emphasizes the importance of expanding Nigeria’s tax base and improving compliance as essential steps toward achieving faster economic growth in 2025.
Speaking at the 2024 End-of-Year Economic Review Technical Workshop in Abuja, Oyedele highlights that the ongoing tax reforms provide a solid framework for sustainable development and equitable growth. He underscores that these reforms aim to enhance revenue generation without adding undue financial burdens on citizens.
“Improved tax compliance and a broader tax base are critical for increasing government revenue. Ensuring everyone pays their fair share creates a system that rewards honest taxpayers while reducing opportunities for evasion,” Oyedele states.
Strengthening Nigeria’s Economic Pillars
Oyedele explains that the additional revenue from improved tax compliance will enable significant investments in key sectors such as infrastructure, healthcare, and education, which are essential for economic growth. He also advocates for policies that incentivize small and medium enterprises (SMEs) by exempting them from Company Income Tax (CIT), thereby fostering job creation and innovation.
“A streamlined and transparent tax system will enhance investor confidence and position Nigeria as a more attractive destination for both local and foreign investment. This will drive industrial growth and technological advancement,” he adds.
Addressing Public Concerns
Oyedele addresses concerns about the impact of tax reforms on cost of living and the proposed changes to VAT revenue allocation. He reassures stakeholders that the reforms aim to reduce the financial burden on low-income households by incorporating measures such as targeted tax reliefs and exemptions.
He further explains that the proposed VAT revenue allocation reforms prioritize fairness by considering derivation principles alongside population and equality-based distributions. “We are actively engaging stakeholders to ensure all concerns are resolved in a way that benefits the nation,” Oyedele states.
Proposed VAT Revenue Allocation
The tax reforms propose adopting a derivation principle for VAT revenue allocation, which has sparked debates across regions. Currently, VAT revenue is distributed as follows:
- 15% to the Federal Government
- 50% to States and the FCT
- 35% to Local Governments
The proposed changes aim to increase allocations to regions that generate more VAT while ensuring equity through a balanced distribution system.
A Call for Collaboration
Oyedele urges stakeholders to support the reforms and work collaboratively to refine their implementation. “These reforms are not just technical adjustments; they are a commitment to equity, efficiency, and economic transformation. Together, we can lay the foundation for faster growth, greater inclusivity, and lasting prosperity in Nigeria,” he concludes.
