The Director-General of the West African Institute for Financial and Economic Management (WAIFEM), Prof. Baba Yusuf Musa, has urged the federal government to work towards increasing revenue generation to tackle economic challenges facing the country.
In a paper delivered on the sidelines of the IMF/World Bank annual meeting in Marrakech, Morocco Sunday, Musa said the government has several options to drive up tax collection and could start from taxing properties.
According to him, the property tax to GDP ratio is less than 1 per cent in the country, thus, the government has opportunities to mobilize tax revenue on property.
“There are minimal issues that the government should have done. We need to have a register that identifies who owns a property and we should have a reporting format such that annually, it can easily be tracked. If you give your house as rent, it is a source of income and at least you should declare it and pay some certain income.”
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He added that another avenue the government can explore is digitalization of the tax collection process which, he said, discourages taxpayers due to poor network connection.
He called for a monitoring mechanism to checkmate the process to enable taxpayers to pay their taxes seamlessly.
He further stated that government waivers for some commodities are becoming another source of issue to the country’s tax collection system and “once those waiver issues are addressed, the government will realize much more than they are realizing.”
Speaking on the fiscal risks government is encountering, he said the reason Nigeria always faced a budget deficit is due to hidden debt.
“Over the years, we have had variations and the principal reason is due to the risks associated with the economy. We thought it would be good to highlight it for the government to take note and see how they can take precautionary measures to make our budget more resilient.
“We have the hidden debt that is not disclosed, which the government does not report in its debt statement, this can involve inter-agency institution debt, for instance owing electricity bills. There are also entities that owe contractors, these are not reflected in actual debt,” he said.
He added that risk such as the climate issue that the nation has been experiencing is also a factor.
“The exchange rate also does not reflect reality. If you look at the reality right now, if you are a state government that owns some amount of external debt, based on the amount that was projected, now due to the devaluation, you will have to generate more naira to pay your debt service. All these volatilities were highlighted.”
He sympathized with Nigerians on the pains they have to go through due to the policies of the new administration, saying, “The cost of living crisis is increasing, most likely, we will have an increase in cost as a result of some of the policies that the new regime found it necessary to implement.”