Government should not be fixated on introducing new taxes and increasing tax rates on the already over-burdened businesses and taxpayers. A long term sustainable approach would be to support businesses by reducing their tax burden especially compliance cost to enable them grow and thereby increasing the tax base and tax revenue in the long-run.
In continuation of our series on tax reform proposals as articulated in the White Paper published by the Nigeria Leadership Initiative (NLI) in conjunction with PwC, this article is a continuation of my thoughts on how to implement the National Tax Policy. From sports to entertainment, tourism to technology, infrastructural development to industrialisation, and the list goes on - Nigeria is a country that is often celebrated more for her potentials than real achievements.
This is true even in terms of natural resources. Nigeria is one of the largest producers of petroleum in the world, with one of the largest proven oil reserves of over 35 billion barrels and over 185 trillion cubic feet of proven natural gas. One of the areas requiring significant improvement is the fiscal regime applicable to the industry. The Petroleum Industry Bill (PIB) was initiated to address some of the issues but no concrete progress has been made and hence the negative impact on the much needed local and foreign direct investment in the sector. The inability to pass the previous versions of the PIB was due to vested interests pulling in opposite directions and lack of sufficient will by the political class.
As much as it is desirable to optimise government take in petroleum operations, this should be done after a ax impact simulation and assessment to determine the additional revenue that is likely to accrue to government and by implication cost to the operators and impact on the economy. This should also be the case for all fiscal policies; for instance, government should be required to quantify the impact of new taxes to be introduced, waivers to be granted and compliance cost among others.