LATEST UPDATE: GDP rebasing: FG orders FIRS to raise tax revenue to GDP to 20%
FROM ISAAC ANUMIHE, ABUJA
Following the emergence of Nigeria as the largest economy in Africa after the rebasing of her Gross Domestic Product (GDP), Federal Government yesterday ordered the Federal Inland Revenue Service (FIRS) to increase the nation’s tax revenue to GDP ratio to 20 per cent.
Speaking while commissioning the FIRS ultra-modern training centre in Abuja, Monday, Co-ordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, said that before the rebasing, the country had a tax to GDP ratio of about 22 per cent, while the non-oil tax revenue to GDP ratio was estimated at 7 per cent. But with the rebasing of the country’s GDP, the tax revenue to GDP ratio had declined to about 12 per cent and 4 per cent for non-oil tax to revenue.
“Nigeria is confronted with many constraints when attempting to increase tax revenue. We have just celebrated the fact that she has now become the largest economy in Africa with N80 trillion of GDP ($509.9 billion), which makes us the 26th largest economy in the world and advances us on our goal to become one of the 20 largest economies in the world by 2020.
“But I want to tell you that there is one piece of the news that is not so cheering. With the increase in GDP, all our revenue ratios have been recalculated. As you know, our revenue ratio to GDP before was 20 per cent, just about in the middle of the emerging market economy, not as good as the 22 per cent we want to be. But now with this recalculation, our revenue to GDP ratio is 12 per cent and our non-oil revenue ratio to GDP is 4 per cent, which means that we live worse than before.
“For those who think we need large GDP to live well, it is not true because by this ratio, it doesn’t look so good. For tax revenue to GDP, we now have to redouble our effort to get back to the 20 per cent ratio we were before. I want all of us to rise up to the challenge with the continuous improvement on the capacity of tax officials through training in the modern method of auditing of companies,” she said.
Earlier in his remarks, Acting Chairman of FIRS, Alhaji Kabir Mashi, said the institute was built at the cost of N800 million, adding that the training centre would be made a full-fledged department to be headed by a director.
According to him, since capacity building is an integral part of the tax reform programmes of government, the training centre would be made available for tax-payer education. In his view, tax education was a major plank on which FIRS was implementing its reform agenda and the service has made a significant inroad in this regard.
However, he admitted that more work needed to be done in this regard as there is much to be done in institutionalising tax culture.
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