Nigerians pay one of world's highest 'implicit tax rates' -- Adesina

Thank you, Mr President, for inviting me to this First National Tax Dialogue organized by the Federal Inland Revenue Services . I congratulate you on this Dialogue.

Nigeria’s Debt-to-GDP ratio will push debt service payments beyond more than 60% of federally collected revenues. With shrinkage in oil revenues, debt service payments pose the greatest risk to Nigeria. To put a human face on the pandemic effects, we estimate that 28-40 million people in Africa are projected to fall into extreme poverty, and 30 million jobs would be lost due to the pandemic.The African Development Bank has been very responsive in supporting Africa. The African Development Bank launched a $10 billion Crisis Response Facility to support African countries to meet the fiscal and economic challenges posed by the pandemic.

But building back will require a lot more resources. Taxes form a significant part of government revenue. The Government should focus a lot on corporate taxes, and ensure full compliance. But it is important to ensure that such taxes do not discourage investments. Profit shifting, base erosion and tax avoidance by multinational corporations form a huge part of “Africa’s missing taxes”; and account for a large share of the over $60 billion illicit capital flows that Africa loses annually.

It is conditional; and it can be assessed and measured for delivery. That is the kind of accountability needed, so tax rebates or exemptions are not abused. Government efforts to secure investments should not be based on giving too much “fiscal sugar” to the companies, so they do not suffer from “fiscal diabetes”.

Given Nigeria’s high level of poverty and huge income inequality, taxes should not be regressive, where taxes paid on goods or services are the same regardless of income. We must also distinguish between nominal taxes and implicit taxes — Taxes that are borne but are not seen nor recorded.Truth be told, Nigerians pay one of the highest implicit tax rates in the world — way higher than developed countries.

Taxation is a social contract between governments and citizens. Tax compliance are higher when citizens are provided the needed public goods in exchange for tax payments.

Still Lai will say they don't have enough resources.

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