Nigerians should brace for new taxes for soft drinks, the Minister of Finance, Budget and Planning, Mrs. Zainab Ahmed, said on Thursday.
Responding to reporters’ inquisitions on the sidelines of the ongoing Annual Meetings of the International Monetary Fund (IMF) and the World Bank in Washington DC, the minister said the new tax is part of plans by the government to widen the revenue net.
The minister explained that the government plans to introduce excise on specific items such as carbonated drinks as well as impose Value Added Tax (VAT) on some items imported into the country.
She said: “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 tax 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.”
Stressing the need to re-establish the social contract between the government and the citizens. Ahmed said: ”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 was surveyed said ‘we don’t think there is anything wrong in not paying taxes and it is not a problem’ and there was 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. So, we have to boost domestic revenue generation and use tax revenue to develop their economies and Nigeria should not be an exception.
“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 in 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 with its 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.
“Also, do we have a lot of incentives and deductions that further constrain the fiscal space that is given in hope of stimulating growth of our industries and to reduce hardship for the poor and vulnerable.”
According to her, the government is working with the National Assembly to review its joint venture contract of 1989, “which had a position that once the oil price goes beyond $20, there is opportunity to renegotiate and increase the royalties that come to the government, so that in the future, we have incremental revenue coming from the crude oil.
”In tune with the fourth industrial revolution, we want a technological reform. For example, in a bid to leverage available big data in our public sector domain, Project Light House was launched last year and driven centrally at the Ministry of Finance to provide intelligence to the FIRS, state tax authorities and other revenue collecting agencies.
“On the Customs front, we are in the process of developing our national single window and customs is using block chain technology to improve revenue.”