Early this year, the International Monetary Fund (IMF) raised concerns about Nigeria’s huge tax expenditure, estimated at four per cent of the country’s gross domestic product (DGP) or N6.8 trillion in 2021. The multilateral lender recommended that the country would need to curb inefficiency in its tax mobilisation to free up resources for funding key growth sectors such as education and health.It is curious that the same IMF which knows where our problem lies, is now calling for more taxes instead of reiterating the imperative of an efficient tax mobilisation.
Without doubt, bringing more Nigerians to the tax net sounds more reasonable, even when we doubt whether doing so is a cure-all for the revenue malaise.
Yet, many Nigerians, including outgoing President Muhammadu Buhari, have expressed concern at the current tax system in the country, characterised by fragmented administration, multiple and sometimes, overlapping taxes. The president himself admitted that much when he stated that “in most tax-efficient nations, tax administrative processes and practices are harmonised within a single system.”
Identifying the problem is one thing. Proffering a solution is another.
Despite revenue remaining unacceptably low, expenditure continues to hit the rooftops, raising questions about the much-vaunted measures to plug leakages, and ensure more income streams by the government.
While the strategies and policies introduced by the Buhari administration in the past eight years to tackle the revenue challenge were loudly trumpeted, they performed abysmally low in terms of delivering actual dividends.
The fiscal space is sagging under humongous budget deficits funded by huge borrowings from domestic and external sources, year-in-year out.
Many analysts have continued to blame unwholesome practices in the ministries, department, and agencies (MDAs) for this development. Despite the implementation of the Treasury Single Account (TSA) which pilot scheme was introduced in 2012 by the preceding administration, TSA is a public accounting system using a single account, or a set of linked accounts by government to ensure all revenue receipts and payments are done through a Consolidated Revenue Account (CRA) domiciled in the Central Bank of Nigeria (CBN).
As the government continues to lament the perennial revenue shortage, the first question the administration should answer is whether its MDAs have sincerely, conscientiously, and effectively harnessed and utilised revenues from different sources.
Only last year, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed told a bewildered audience in Abuja that huge amounts of public funds were still trapped in commercial banks, about seven years after full implementation commenced.
Simply put, some MDAs and commercial banks are still hiding government funds.
The familiar refrain from the nation’s fiscal managers has been that Nigeria does not have a debt problem but a revenue problem.
For them, the poor revenue haul therefore continually presents a ready-made alibi for the nation’s economic woes. That all the well-advertised strategies and policies introduced by the administration to stem the tide have failed should compel a rethink. Each time the government mulls measures to shore up revenue, the easiest window available has always been the desire for more taxes, despite the huge negative implications on individuals, and corporate bodies already buffeted by the harsh economic environment.