By Ken Afor
The Speaker of the House of Representatives, Rt. Hon. Tajudeen Abbas, has raised concerns over Nigeria’s inefficient collection of Value Added Tax (VAT), stating that it is among the lowest compared to other African nations.
He noted that this indicates significant inefficiencies within the country’s tax system.
In light of this issue, Speaker Abbas has expressed the 10th House of Representatives’ readiness to support and aid the economic policies and programs of President Bola Ahmed Tinubu’s administration.
He highlighted the House’s commitment to engaging with relevant stakeholders on laws governing finance, taxation, and the oil sub-sectors of the economy.
The objective of these engagements according to the Speaker is to facilitate positive reforms that can improve the efficiency and effectiveness of these critical areas.
Abbas stressed the importance of addressing the VAT collection shortcomings and overall tax system inefficiencies to bolster Nigeria’s economic performance and align with the goals of the Tinubu administration.
He made these remarks on Tuesday in Abuja while delivering his keynote address at the opening of a two-day retreat for members of the House.
The legislative retreat, focused on economic transformation and development, was organized by the House in collaboration with the Federal Inland Revenue Service (FIRS) and the Konrad Adenauer-Stiftung Foundation (KAS).
The theme of the retreat is ‘Navigating Change: Legislative Strategies for Economic Transformation.’
Abbas highlighted that the House has made a deliberate decision to focus on tax reforms and modernization, as well as a review of the implementation of the Petroleum Industry Reform Act (2021).
“The overarching objective is to discuss and identify concrete legislative strategies for economic transformation,” he said.
He expressed his pleasure that the legislative retreat, focused on economic transformation and development, was taking place “at a point in our nation’s economic landscape when the current administration is diligently implementing policies and initiatives to steer our economy towards recovery, growth, and sustainable development.”
During his address, Abbas commended the commitment and foresight shown by the government in addressing economic challenges.
He stated: “The government deserve commendation, and it is imperative that we, as legislators, align our efforts to support and enhance these endeavours.”
“As a critical arm of government, the legislature has a crucial role in shaping our nation’s economic transformation and development. Part of our law-making powers is the authority to enact tax reforms and strengthen resource governance mechanisms. By designing and implementing progressive tax policies, we strive to ensure a fair and efficient tax system that boosts revenue while fostering economic growth and equity. This involves not only broadening the tax base and simplifying tax codes but also enhancing compliance and minimising loopholes that benefit only the wealthy.
“Furthermore, the legislature’s oversight function is central in the governance of natural and financial resources. It ensures transparency and accountability in the exploitation and management of resources, which is essential for sustainable development. By holding government and private sectors accountable, the legislature helps prevent the mismanagement and corruption that can often undermine economic progress.”
The Speaker further added that the purpose of the retreat was to promote active participation from stakeholders, facilitate productive discussions, share diverse perspectives, and gain valuable insights into legislative approaches that could drive economic transformation within the nation.
“Accordingly, this forum allows us to take a deep dive into the tax reforms instituted by President Tinubu and undertake a review of the implementation of the Petroleum Industry Act (2021). We consider these two initiatives vital in our nation’s quest for economic recovery, transformation and growth. The two areas speak to both the oil and non-oil sectors of the Nigerian economy,” he said.
He acknowledged that Nigeria faces challenges in generating sufficient tax revenue noting that factors contributing to this include a limited base for indirect taxes, poor compliance rates among taxpayers, excessive tax exemptions granted, and generally low tax rates across the board.
Also, the Speaker noted that this situation is further exacerbated by “a lack of enthusiasm and morale for tax compliance, contributing to the nation’s underwhelming fiscal performance.”
He stressed: “Comparatively, Nigeria’s efficiency in collecting Value Added Tax (VAT) is the lowest among its African peers, indicating significant inefficiencies in its tax system.
“This trend of low tax revenue, coupled with a continued dependency on the increasingly unstable oil revenue, presents a major risk to Nigeria’s fiscal sustainability. It also highlights an important area for potential reform to boost revenue and stabilise the country’s economic framework.
“The lack of growth in non-oil revenue sources and the volatile nature of oil income underscore the urgent need for Nigeria to diversify its revenue base and enhance its fiscal management to ensure economic stability and growth.”
According to Speaker, multiple research studies have demonstrated that Nigeria possesses significant untapped potential to bolster its revenue generation if key reforms are enacted to improve the taxation system.
He, therefore, assured that “the House stands ready to support the Executive to achieve its overall goal of reversing the negative trend.”
The Speaker further stated that pursuing tax reforms aligns with the legislative priorities outlined by the House of Representatives. Their agenda emphasizes fostering economic growth and development through measures such as restructuring the economy, diversifying revenue streams, boosting agricultural development, and enacting taxation overhauls.
According to him, these tax reforms would aim to simplify the nation’s tax codes, broaden the tax base, and implement stronger mechanisms to improve compliance from taxpayers.
The Speaker stressed: “Of particular interest to the House is increasing government revenues without unduly burdening the citizens, especially the vulnerable.”
According to him, another key theme explored at the retreat was the transformative potential of digitalization and technological innovations for tax administration systems. He explained that leveraging these modern tools can enhance the efficiency, transparency, and fairness of taxation processes.
Also, advancements in digital technologies would enable tax authorities to collect, process, and analyze information more effectively, ultimately bolstering their operational capabilities.
The Speaker also noted that integrating digital solutions could tremendously benefit taxpayers by streamlining compliance procedures.
According to the Speaker, the second part of the retreat focused on the recently enacted Petroleum Industry Act (PIA), which he described as a landmark legislative achievement by the 9th Assembly.
“This Act is not just a piece of legislation but a transformative blueprint designed to overhaul the petroleum industry, which is the backbone of our economy,” he said, adding that, “It’s an opportunity to align our actions with our aspirations, ensuring that this vital sector operates efficiently, transparently, and, most importantly, beneficially for every Nigerian.”
The Speaker emphasized the crucial role of the National Assembly in conducting ongoing evaluations of the Petroleum Industry Act.
He stated that to maintain the Act’s effectiveness amidst the rapidly changing dynamics of the industry, a meticulous process of monitoring its implementation, analyzing its impacts, and pinpointing areas that may require amendments or modifications is essential.
He added that through this continuous review process, the legislature can ensure the Act remains optimally aligned with the evolving landscape.
“For this reason, we are actively engaging various stakeholders at this retreat, including government bodies, industry experts, and community representatives.
“Today’s sessions are designed to gather diverse perspectives and insights, which will be essential for making informed amendments that address emerging challenges and ensure that the Act meets its intended objectives.
“This iterative process will not only help in fine-tuning the Act but also ensure that it remains aligned with the broader economic and environmental goals of Nigeria,” he said.
