In its determination to broaden its revenue base, the federal government Wednesday said it was targeting N2.95 trillion in tax revenue from the non-oil sector in 2014 by tightening the noose around tax evaders.
Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, made this known while briefing State House correspondents after the weekly Federal Executive Council (FEC) meeting.
According to her, over 75 per cent of small scale business operators had the penchant for tax evasion in the country.
Okonjo-Iweala noted that the non-oil revenue drive would jack up the Federal Internal Revenue Service (FIRS) target put at N2.2 trillion by N75 billion.
She disclosed that the federal government had contracted McKinsey & Co., a leading consultancy group, to help government work out modalities for the project.
“One of the areas of weakness has always been in our tax policy. The new move will see the non-oil sector contribute more to the economy through payment of appropriate taxes by the relevant organisations.
“The FIRS has a target of N2.2 trillion under the 2014 budget and Nigeria can increase this by another N75 billion and we hope that in the medium-term we can improve further.
“The company (McKinsey) will collect 1.75 per cent from the projected revenue which is one of the lowest in the world,” the minister said.
According to her, the finance ministry was working hard to strengthen the non-oil revenue collection in a bid to diversify the economy in the face of dwindling oil revenue.
The minister disclosed that Nigerian tax to Gross Domestic Product (GDP) ratio was only 7 per cent, noting that government was working hard to increase this ratio to 22 per cent of GDP by the end of 2015.
“FIRS has really worked hard but we feel that there is still room to do better. Compared to South Africa and Angola, Nigeria’s tax to GDP ratio is the lowest, so McKinsey and company have found out that 75 per cent of our medium scale enterprises are not paying taxes, 30 per cent of those enjoying pioneer status are also abusing the privileges. So we want to ensure that we do what is right,” Okonjo-Iweala stressed.
McKinsey, according to the minister, will start operations this year over the next 12 Months and is expected to be paid 1.75 per cent as commission, which translates to N470 million from the targeted collectible revenue.
McKinsey is being contracted to provide technical support to the FIRS towards non-oil revenue enhancement and capacity building in the organisation.
She said it was FIRS that brought a memo to strengthen non-oil tax collection, adding, “The country intends to grow the contribution of tax from 7 per cent to 22 per cent of GDP by blocking all the loopholes and leakages in tax collection. That is why we sought to find avenues to support the FIRS.”
The minister said McKinsey has proffered five strategies to be adopted by the FIRS, namely: improve audit, tax filing enforcement, review of tax holidays and exemption, tax arrears and debt enforcement, increased registration of companies, and improved external communication.
FEC also approved $8.75 million for the services that will be proved to FIRS by McKinsey over a 12-month period.
The council also approved a memo by the Minister of Communications Technology, Mrs Omobola Johnson, on the National Addressing Policy that will standardise communications systems in the country.
This policy, according to the communications minister, who also briefed reporters, would make it easier to locate people through postage of letters, provide emergency services and check criminal activities.
The new policy will also incorporate the automated Geographic Information System.
“What we already have in place is a non-standard system, but as we work with the state and local government system, council granted approval for the National Addressing Policy which will set out the framework for the development and implementation of the National Addressing Policy System in Nigeria.
“In particular, this policy will assist government’s ability to plan and implement public policies and services, fight against natural disasters and diseases, including emergency management, and reinforce national and international security in line with the UN Universal Postal Union’s Doha Declaration.
“The project will enhance fundamental steps in connecting people to public and private services, human rights and set the foundation on which critical national policies can be built,” she added.
© dARA for Royal Times of Nigeria Newspaper, 2013. |
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posted in Business by Tunde LEMUEL