The Nigerian federal government plans to reduce the current number of taxes, which stands at 62, down to less than 10. President Bola Tinubu has expressed his determination to boost the country’s tax revenue from the current 11% of the GDP to 18% within a three-year timeframe. This is a significant development, and it could have a major impact on the Nigerian economy.
Currently, Nigeria has a complex and fragmented tax system, with over 60 different taxes collected at the federal, state, and local government levels. This can be a burden for businesses, and it can also make it difficult for the government to collect taxes efficiently.
The Nigerian government has recognized the need to reform the tax system, and it has set a target of reducing the number of taxes to less than 10. This would simplify the tax system, make it easier for businesses to comply, and help the government to collect more revenue.
There are a number of ways in which the Nigerian government could reduce the number of taxes. One option would be to merge some of the existing taxes into a smaller number of broader taxes. Another option would be to eliminate some of the less important taxes altogether. The government could also consolidate some of the tax collection and administration functions or it could introduce new technologies and processes to improve tax administration.
On merging some of the existing taxes into a smaller number of broader taxes, the government could merge the value-added tax (VAT) and the personal income tax into a single income tax. This would simplify the tax system and make it easier for businesses and individuals to comply.
On eliminating some of the less important taxes altogether, the government could review the existing tax system and identify taxes that are no longer necessary or that are generating very little revenue. These taxes could then be eliminated.
On consolidating some of the tax collection and administration functions, taxes are currently collected and administered at the federal, state, and local government levels. This can be inefficient and lead to duplication of effort. The government could consolidate some of these functions, such as tax registration and collection, into a single agency.
On introducing new technologies and processes to improve tax administration, the government could invest in new technologies, such as electronic tax filing, to make it easier for businesses and individuals to comply with their tax obligations. The government could also improve its tax administration processes, such as risk assessment and audit procedures, to ensure that taxes are collected fairly and efficiently.
The Nigerian government has not yet announced any specific plans for how it will reduce the number of taxes. However, the government has said that it is committed to reforming the tax system and making it more efficient.
The reduction of the number of taxes in Nigeria could have a number of positive effects on the economy. It could make it easier for businesses to operate and invest, and it could lead to increased economic growth. It could also help the government to reduce its budget deficit and improve its financial position.