Data as critical factor to enhancing tax collection, compliance

By Chinwendu Obienyi 

In an effort to reduce Nigeria’s huge tax gap currently estimated at 14 per cent of GDP and enhance tax collection and compliance in Nigeria, tax experts have called for more transparency on what government does with tax monies.

These were the words of experts who spoke at a one -day capacity building programme for media practitioners and stakeholders in Nigeria’s taxation system which held in Lagos at the weekend.

The event which was organised by Omnimedia Nigeria Limited in conjunction with the Federal Inland Revenue Service (FIRS) was themed “Tax and Media: Communicating the Importance and Impact,” saw papers presented by Faculties to capture its various aspects.

Delivering a paper titled; Understanding taxation focusing on Mandate, Vision and Policy Thrust of the current executive chairman of the Federal Inland Revenue Service (FIRS), Managing Partner at GBC Professional Services, Chartered Accountants and Tax Practitioners, Sir Gbenga Badejo, said Nigeria’s tax to GDP ratio in 2020 (5.5 per cent) was lower than the average of the 31 African countries in Revenue Statistics in Africa 2022 (16 per cent) by 10.4 percentage points.

He noted that the Africa (31) average was not available before 2009 due to missing data in some countries.

According to him, there is poor and uncoordinated publicity of what the government does with tax monies and this presents a great disincentive for people to pay tax.

“In Nigeria, the practice of tax payment according to revenue strength hardly obtains, since the perception is that the tax administration (as well as the management of the funds) favours the rich as against the poor. There is a pervading ignorance about tax and taxation in Nigeria, including among media practitioners, the purveyors of information and enlightenment. The role of the media is cardinal in educating and informing the tax-paying public on all matters of tax and taxation”, Badejo said.

For his part, the Vice President, Chartered Institute of Taxation of Nigeria (CITN), Mr Olusola Agbeluyi, while discussing the topic, “Creating Better Understanding Between Tax-payers and FIRS for National Development, said, there should deliberate and aggressive engagement with the public in a manner that would make taxpayers see themselves more of partners with FIRS.

Agbeluyi added that this will not only encourage the paying segment of the public, but it will also help to net in most of those not paying.

He recommended that, “There should be enhanced tax administration system that guarantees the following: Make the burden of taxpaying egalitarian among all payers by demonstrating equity and fairness in the tax system; there should be convenience of the system, in such a way that collection and payment are not encumbered in any way.

Tax should not be administered in manner that discourages investment and/ or acts as disincentive to saving, FIRS should strive to make the system less opaque and cumbersome for the paying public and the agency will have to embark on sustained and result-driven education and enlightenment initiatives that will encourage more Nigerians to become taxpayers”.