RECENTLY, the International Monetary Fund, IMF, lamented Nigeria’ low tax revenues. Two weeks ago, when launching the IMF’s Regional Economic Outlook for Sub-Saharan Africa, the Fund’s Director for Africa, Abebe Selassie, said: “For a country like Nigeria, Africa’s most populous country, with all those development spending needs, we think it is problematic that the tax revenue to GDP is only 8-9 per cent when it should be a lot higher.
When Bola Tinubu became president, he made boosting Nigeria’s tax revenue a priority, and said his administration would increase Nigeria’s tax-to-GDP ratio to 18 per cent by 2026. In July 2023, Tinubu inaugurated the Presidential Committee on Fiscal Policy and Tax Reforms, headed by Taiwo Oyedele, a tax expert at the accounting firm PwC.
Unfortunately, the Nigerian economy is not producing enough taxpayers. The middle classes are disappearing, and those left are mostly managing to eke out a living. According to an estimate by the International Labour Organisation, ILO, 93 per cent of all employment in Nigeria is in the informal sector. And, of course, everyone knows that most of those in the informal sector don’t pay tax. First, because they earn very low income or depend on a daily income to survive.