Abebe Selassie, director of the African Department (AFR) at the International Monetary Fund (IMF), says Nigeria needs to change its tax policies to increase revenue mobilisation.
The IMF senior official made this statement while addressing the press at the ongoing annual meetings of the World Bank Group and International Monetary Fund (IMF) holding in Washington DC.
“I think the ministry of finance has identified quite a few steps that can be taken by way of tax administration, improving tax administration, making sure that people are paying the taxes that they meant to be paying and whether or not identifying and taking action,” he said.
“But our guess is that there also is going to be a need for tax policy changes to be able for Nigeria, which has a very, very low level of revenue mobilisation, to improve that.
“What the experience in the region has shown is that adjustment based on revenue mobilisation is generally likely to have smaller effects on growth than those adjustments based on cutting spending.
“The medium level of debt in sub-Saharan Africa has increased from 34 percent in 2013 to 48 percent of GDP in 2016. Most of the pronounced increase in debt has happened in oil-exporting countries following the deterioration in their economic conditions
“Most sub-Saharan African countries are planning fiscal adjustment in the coming years so the key policy message in passing will be that countries need to stick to the adjustment plans that they have planned.
“Absent this, if they fail to do the adjustment that they have already planned we will see public debt going up at the same elevated pace that it has been growing in the last couple of years.”
The ministry of finance and the Federal Inland Revenue Service (FIRS) have launched programmes like the tax amnesty and the Voluntary Assets and Income Declaration Scheme (VAIDS) to increase tax compliance and revenue derived from tax.
In March 2017, the federal executive council approved a new national tax policy for the country.