Finance Minister Kemi Adeosun plans to drag tax defaulters who do not make use of an amnesty to court as she seeks funds to plug the nation’s $25 billion infrastructure gap.
In the nine months of reprieve ending March, some penitent taxpayers have said “you got me” and cleared arrears without paying interest and or penalties, Adeosun said in an interview on Tuesday in her office in Abuja. But some have said “we wish you luck with this, catch us if you can,” she said.
Nigeria wants to double its tax to gross domestic product ratio by 2020. The current proportion of six percent is among the lowest in the world, with peers like South Africa at 26 percent, and Ghana at almost 16 percent.
Boosting tax collection will make more money available to help spur activity in an economy that contracted in 2016 due to a decline in the output of oil. The commodity makes up 10 percent of the economy but contributes about two thirds of government revenue. The state is cleaning its payroll to stop salaries to people no longer in their roles, saving about N25 billion ($69.3 million) monthly.
Basic Needs
“We are working on a litigation strategy because, in some cases, we need to go after people,” Adeosun said. “If tax amnesty closes and we have information that makes it very clear that you are evading tax, then we move on to prosecute, and make an example of a few people. We have 180 million people, we have basic needs to be met.”
While Nigeria has some of the world’s wealthiest people, including Aliko Dangote, Africa’s richest, it also has millions of poor people, mostly in the insurgent-ravaged North East. After the government started implementing biometric registration for bank accounts in an anti-corruption campaign, a whistle blower exposed $38 million of cash and other currencies in an apartment in the commercial hub of Lagos in April.
“We looked at high-net worth people, we profiled a number of them,” Adeosun said. “We looked at Panama papers. And then we compared that to people’s tax returns and the disparity is just amazing. People have foundations which they have bequeathed more money to than their tax returns can explain that they have,” she said.
More than five decades ago, before petrodollars started flowing into the country, far more adult Nigerians used to pay the so-called poll tax on assets, including cattle, mostly in the North, and crops mainly in the South. Now, out of a population of 71 million adults, there are only 14 million taxpayers, Adeosun said.
“Oil came and we just decided we didn’t need to mobilise revenue anymore,” she said. “The legacy of that is that you had a whole generation of people who have never really had to pay a proper tax and that’s reflected in our numbers.”
(Bloomberg).