With a personal income tax of 24 per cent, company income tax of 30 per cent and a value added tax of 7.5 per cent, Nigerians pay one of the highest tax rates in the world although the government only gets a fraction of it. This was stated by the Fiscal Policy Partner and Africa Tax Leader at PwC, Taiwo Oyedele, at the weekend.
According to him, Nigerians pay three different taxes making them one of the highest tax payers in the world.
Oyedele noted that Nigerians pay taxes to government, non-state actors as well as implicit tax. “Nigerians say they pay so much in taxes and government say we collect so little, both of them are correct.
“When Nigerians say we pay a lot in taxes they are talking about the tax paid to the government and the informal taxes they pay to non-state actors. Recently a report said “agberos” (touts) collect N1.3 billion annually in Lagos that is the highest internally generated revenue of any state in Nigeria with the exception of Lagos.
“So Nigerians count that as taxes because they are forced to pay and that is tax. The third tax we pay is implicit tax. Implicit tax is when you begin to perform the function of government using your own resources when you add the three together, Nigerians pay one of the highest tax rates in the world.
“Unfortunately it doesn’t get to the government because only one portion of the three gets to the government and even that portion, they use consultancy to extract a significant portion of it.
Speaking on the need for the government to drive revenue in the country as against increasing its already worrisome debt burden, he said “Nigeria debt profile has risen on the average by 21 per cent over the past five years and this is around 156 per cent increase as at 2020. In the same period GDP had risen by an average of 0.15 per cent and revenue had expanded by five per cent in the same period resulting in debt service cost in ratio of revenue getting close to 100 per cent. This is where we need to start getting worried. The International Monetary Fund (IMF) thinks that we are not reporting all our debts and it looks like we are padding our debt burden.