62 total views, 1 views today
I was the keynote speaker at an economic dialogue on Nigeria organised by Konrad Adenauer Stiftung (KAS) and the Delegation of German Industry and Commerce in Nigeria (AHK) on 23 May 2019. Titled “Road to Economic Development: Challenges and Opportunities”, the dialogue was aimed at shaping the priorities of the incoming second administration of President Muhammadu Buhari. The following is the final and fifth part of the highlights of my speech.
Take a charge on bank deposits to raise revenue
For the authorities, the most pressing matter is revenue. When there has been a boom in the economy, it was largely because crude oil prices were high. I doubt very much that it was crude oil itself that caused the boom, though. After all, oil is just about 10 percent of GDP. My reckoning is that a buoyant public purse and consequent free-spending government tends to inspire confidence all around. In other words, when the government is “happy”, it tends to be contagious. As oil prices are volatile, the weight of that purse varies with the times. Thus, there is a need for it to be reliant on more stable sources of revenue. In other words, we need the government to be “happy” most of the time.
Nigerians in formal employment are already taxed automatically. Those in the informal economy are not. And while even those Nigerians would not mind paying taxes, there is a lot that discourages them. Taxing consumption via value added tax (VAT) tends to be an effective way to bring as many people as possible into the tax net. At 5 percent, Nigeria’s VAT rate is relatively low. (Kenya’s is 16 percent.) So, the Nigerian government could certainly increase the VAT rate. Judging from the … Read More...