The Minister of Finance and the Coordinating Minister of the Economy, Wale Edun, says the federal government has no plan to increase the current tax rates.
Edun stated this on Monday when he defended the 2024 budget proposal before the House of Representatives Committee on Appropriations.
While responding to questions from the lawmakers on the prospect of increased tax rate, Edun said the government is not considering tax increments, but rather seeking to increase the tax bracket and capture more people and entities.
He said the government is even aiming to reduce tax rates when necessary in order to create incentives for private-sector investments.
His words: “There is no plan for an increase in the tax rate as such. The plan is to increase the revenue from taxation. The plan is to increase taxation returns as a percentage of tax to GDP from around nine per cent as it is now to 18 per cent in three years. This is closer to the African average.
“So, the emphasis is on collection, not on increasing the rate. The emphasis is on collection efficiency, particularly collection. For a government that is dependent on private investments, foreign direct investment and domestic investment. The intention is to reduce taxes, not to increase it and to increase the money into creation of employment.”
“The emphasis is on raising revenue. Government spending as a percentage of GDP is very low. When you compare it to the developed world where they spend over 50 per cent, like the Scandinavian countries, even in Africa, it is too low. Which means the government is not spending enough on infrastructure and social services.
“About one per cent of the GDP of this country is given out as tax incentive, import duty waivers and others.”