Speaker of the House of Representatives, Tajudeen Abbas, on Monday, expressed serious concern over Nigeria’s tax-to-GDP ratio, which stands at just six per cent despite the country being Africa’s largest economy.
This figure falls significantly below the global average and the World Bank’s recommended minimum benchmark of 15 per cent for sustainable development.
Speaking during an interactive session on Tax Reform Bills at the National Assembly Complex in Abuja, Abbas underscored the urgent need for reforms to stimulate economic productivity and reduce reliance on debt financing.
“Nigeria, despite being Africa’s largest economy, struggles with a tax-to-GDP ratio of just 6%, far below the global average and the World Bank’s minimum benchmark of 15 per cent. This is a challenge we must address to reduce reliance on debt financing, ensure fiscal stability, and secure our nation’s future,” Abbas said.
The proposed tax reform bills aim to diversify revenue sources, promote equity, and create an environment conducive to investment and innovation. However, Abbas stressed the importance of ensuring that the reforms are fair and balanced.
“Taxes should be fair, transparent, and justifiable, balancing the need for public revenue with the burdens they impose on individuals and businesses. As representatives of the people, we must approach these reforms thoughtfully, understanding their implications for every segment of society,” he added.
Abbas acknowledged the debates surrounding the tax reform bills, describing them as reflective of their importance in a democracy.
“The debates in the media, civil society, and among stakeholders reflect the importance of these reforms. Such discussions are healthy in a democracy. This session aims to channel these debates into productive outcomes by listening to diverse perspectives and addressing ambiguities,” he noted.
He clarified that the House has yet to take a definitive position on the bills, assuring Nigerians of a thorough review process.
“Our role is to scrutinize them thoroughly to ensure alignment with the best interests of Nigerians. We owe this duty to the people,” Abbas emphasized.
The Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oyedele, also addressed the session, reassuring lawmakers and stakeholders that the proposed reforms are not designed to target or disadvantage any region.
“The proposed tax reforms will ensure efficiency and increase revenue for states where goods and services are consumed,” Oyedele explained.
He further clarified that the current revenue-sharing structure for Value Added Tax —15 per cent to the Federal Government, 50 per cent to States and FCT, and 35 per cent to Local Governments—would remain unchanged.
Oyedele highlighted several initiatives in the reforms to support economic growth, including:
– Encouraging the Digital Economy: Changes to income tax laws will enable remote work opportunities in the global business process outsourcing sector, benefitting Nigerian youths in the digital economy.
– Boosting Exports: The reforms will include measures to enhance the export of goods and services.
– Supporting Small Businesses: Small businesses with annual turnovers of ₦50 million or less will benefit from tax exemptions, including 0% corporate income tax, VAT, and withholding tax.
The interactive session, described as a pre-legislative review, allowed lawmakers to engage with experts and stakeholders to better understand the implications of the proposed reforms.
Abbas assured Nigerians that the outcome of the legislative process would prioritize public and national interests, paving the way for sustainable economic growth.
“We are committed to delivering reforms that ensure fiscal stability while promoting equity and fairness for all Nigerians,” he stressed.