The federal government plans to increase Nigeria’s tax revenue from the current value of seven per cent to 18 per cent by the next fiscal year, Director General of the Debt Management Office (DMO), Dr. Abraham Nwankwo has said.
Nwankwo who stated this in a chat with journalists in Lagos stressed that Nigeria, as the biggest economy in Africa should also boast of the biggest revenue from public tax.
Pointing out that Nigeria needs effective tax administration to achieve the feat, he said the minimum tax revenue collected by countries in Nigeria’s pear group is 18 per cent while Nigeria only earns seven per cent tax revenue.
On the contrary, he said developed or industrialised countries realised as much as 27 per cent of public tax revenue.
He stated that Nigeria can double its public tax revenue if every Nigerian and corporate organisations pays their tax as required by law adding that this will make Nigeria’s debt sustainable.
Nwankwo said: “If we achieve 18 per cent of tax revenue Nigeria will be able to meet most of its obligations. Stakeholders must do what they can to support the Ministry of Finance and the Federal Inland Revenue Service (FIRS) to achieve this. In the past, Nigeria depended solely on crude oil revenue but indications now showed that Nigeria should to traditional ways of funding its obligations.”
The DMO, he added, is committed to making sure that Nigeria raise money to fund the 2016 budget deficit from appropriate sources and through appropriate mix during the fiscal year to make sure that capital projects are funded.
Contrary to fears in some quarters that the country has over borrowed, the DMO boss stressed that the Nigerian debt level was highly sustainable, noting that the nation still had a lot of idle potential, which the administration is striving to harness for effective growth of the economy.
Nwankwo disclosed that Nigeria’s debt to GDP ratio is 13 per cent, its peer group has 56 per cent.
“So in that essence, our debt is still very sustainable. In this respect, I am encouraging all Nigerians to continue to make sure that they pay their taxes fully as and when due because our tax revenue to GDP ratio is relatively low compared to countries in our peer group,” he said.
He said full payment of taxes by individuals and corporate bodies would enhance debt and overall economic sustainability of the country.
Speaking on the economic recession, which he said was caused mainly by unfavourable structural change in the fall of oil prices globally, Nwankwo said the Nigerian government was addressing the challenge through diversified, self-sustaining growth in agriculture and agro processing, solid minerals, manufacturing and information communication technology (ICT).
According to him, in the medium to long term, debt sustainability in Nigeria hinges on the overall sustainability of the economy, and the overall economic sustainability hinges on diversifying the economy in a sustainable manner.
“That is what the government is doing in agriculture, solid minerals, ICT and manufacturing. And to do that, we need a strong infrastructure base and that is why government is spending what it is borrowing on capital projects,” Nwankwo said.