The presidents of the African Development Bank on Thursday spoke extensively on how the government can use tax to improve its revenue without hampering business growth
He stated that Nigeria economy shrunk by 3 per cent in 2020 as a result of the oil crash and the effect of the lockdown on economic activity.
“We project that Nigeria’s economy is poised to recover to the growth of 1.5% in 2021 and 2.9% in 2022, according to the African Development Bank’s soon to be released African Economic Outlook”
“But building back will require a lot more resources. Taxes form a significant part of government revenue”.
While the government is focused on ensuring full corporate tax compliance it is also important to ensure that such taxes do not discourage investment. He urges the government to lighten the huge cost of running business in the country.
He added that “Nigeria’s companies lose on average 10% of sales because they do not have access to reliable and affordable electricity and 86% of small and medium-sized enterprises in Nigeria spend $ 14 billion annually on diesel for generators.”
“Truth be told, Nigerians pay one of the highest implicit tax rates in the world — way higher than developed countries.”
Though, taxation is a social contract between governments and citizens. When the citizens are provided with the needed public goods such as good roads, constant power supply and other social amenities in exchange for tax payment such actions would enhance people’s trust in the government.
Adesina concluded by stating that “the African Development Bank is ready to provide needed technical and institutional support to the Federal Inland Revenue Service to build up its capacity for tax administration”