President Tinubu has approved the formation of a presidential economic policy and tax reform committee.
Price Water house Coopers (PwC) fiscal policy partner and Africa tax head, Taiwo Oyedele, has been named chairman of the committee.
Dele Alake, who happens to be the president's special assistant on special tasks, communications, and strategy, announced the news in a statement on Friday.
According to Dele, the group would include specialists from both the private and governmental sectors and will be in charge of many aspects of tax law reform, fiscal policy, tax harmonisation, planning and coordination, and revenue management.
He stated that the committee’s primary goal is to promote the effective utilization of tax and other revenues to boost citizens’ tax morale, enhance revenue collection efficiency, ensure transparent reporting, and foster a healthy tax culture, as well as drive voluntary compliance.
Speaking on the committee’s establishment, Zacchaeus Adedeji, who's the special adviser to the president on revenue, said the president acknowledged the importance of a strong fiscal policy environment and an effective taxation system for the functioning of the government and the economy.
â€Nigeria ranks very low on the global ease of paying taxes while the country’s Tax to GDP ratio is one of the lowest in the world and well below the African average,†he said.
â€This has led to an overreliance on borrowing to finance public spending which in turn limits the fiscal space as debt service costs consume a greater portion of government revenue, annually resulting in a vicious cycle of inadequate funding for socio-economic development.
â€While some incremental progress has been recorded over the years, the outcomes have not been transformative enough to change the narrative.â€
The primary issues in Nigeria's tax system, according to Adedeji, include many taxes and revenue collection agencies, a fragmented and complex tax system, low tax morale, and a high rate of tax evasion.
Others, according to him, include the high cost of revenue administration, the lack of coordination between fiscal and economic strategies, and the absence of responsibility in the use of tax income.
â€Our aim is to transform the tax system to support sustainable development and achieve a minimum of 18% Tax to GDP ratio within the next 3 years without stifling investment or economic growth,†the special adviser said.
â€It should be noted that this committee will not only advise the government on necessary reforms, but will also drive the implementation of such recommendations in support of the comprehensive fiscal policy and tax reform agenda of the current administration.â€
The development comes a day after Tinubu issued four executive directives, including the suspension of the 5% excise tax on telecommunications services and the rise of excise charges on domestically manufactured goods.
The federal government has also halted the import adjustment tax (IAT) on some automobiles, as well as the green tax on single-use plastics (SUPs).