Tax exemptions, concessions among sources of revenue leakages, says Zainab Ahmed

Zainab Ahmed, minister of finance, budget and national planning, says federal government policies on tax exemptions and concessions are among sources of huge revenue leakages.

A tax exemption is the right to exclude all or some income from taxation while a tax concession is a reduction made by the government in the amount of tax that a particular group of people or type of organisation has to pay or a change in the tax system that benefits them.

Ahmed disclosed this on Monday at a workshop on tax expenditure organised by the Economic Community of West African States (ECOWAS) in Abuja.

The minister said while tax exemptions and concessions were granted to grow the economy, it now “constitutes huge tax expenditures and revenue leakages to the government”.

Ahmad was represented by Fatima Hayatu, director, technical services in the ministry.

“Nigeria is faced with challenges in mobilising domestic funds necessary for human capital development and infrastructure that are both drivers of sustainable economic growth and development,” Ahmad said.

“Our current revenue to GDP ratio of about seven per cent is unsatisfactory and we are keen on improving this by implementing various initiatives.

“The case remains the same with our current contribution between oil and non-oil GDP, for which our analysis on oil revenue to oil GDP reveals as 39 per cent while non-oil revenue to non-oil GDP as 4.2 per cent.

“Our value-added tax revenue to GDP in Nigeria for example stands at less than one per cent, 0.8 per cent, which compares unfavourably to ECOWAS average of 3.4 per cent.” 

The minister further said the government had recently issued a tax expenditure statement call circular to relevant agencies of government, indicating guidelines and instructions for strict adherence, compliance, and reporting.

She also lauded the effort of ECOWAS to revamp tax generation and block leakages through undertaking the Programme for Tax Transition in West Africa (PATF).

On his part, Salifou Tiemtore, director of Customs Union and Taxation, said the PATF programme would bolster the regional fight against fraud, tax evasion, illicit financial flows and other forms of corruption.

He added that efforts would be made to ensure improvement in the management of tax amongst member states through the PATF tools.