The Director General of Debt Management Office (DMO), Dr. Abraham Nwankwo.
The Debt Management Office (DMO) has flayed Nigeria’s low tax revenue contribution to the Gross Domestic Product (GDP).
Essentially, DMO called for the expansion of tax net and concomitant administrative compliance to boost the economy.
As stated by the DMO, Nigeria’s tax revenue’s contribution to GDP stood at less than seven per cent, while the average taxation required by government to generate a maximum value for the economy is 30 per cent.
The Director-General of DMO, Dr. Abraham Nwankwo, while addressing journalists at a workshop held in Lagos on Tuesday, argued that the nation’s current tax percentage is relatively very low, when compared to 18 per cent achieved by other developing countries.
He maintained that the nation’s debt and economic sustainability can be influenced by individuals and corporates complying fully to tax payment going by the huge population of the country.
“There must be effective tax administration compliance in running the economy. All over the world, government depends optimally on taxation to run the economy, going by the population. Nigeria should not find it difficult servicing huge projects. We should not have problem reviving the infrastructure. The minimum we should be is in 18 per cent like that of our peers.”
The DMO boss, who expressed optimism that the country would achieve 18 per cent taxation in the next fiscal year, explained that the Federal Government is committed to channeling all money to be borrowed to finance the 2016 budget to fund capital projects.
He stressed that the Nigerian debt level is highly sustainable, noting that the nation still had a lot of idle potential, which the administration is currently working to harness for effective growth of the economy.
“The debt to GDP ratio is 13 per cent, compared to the 56 per cent of peer group. So in that essence, our debt is still very sustainable. In this respect, I am encouraging all Nigerians to continue to make sure that they pay their taxes fully as at when due because our tax revenue GDP ratio is relatively lower to countries in our peer group. As our economy grows, as our GDP grows, as we are collecting enough in taxes from individuals and corporates bodies to be able to fund capital projects, our economy will not stop to grow” he stated.
Nwankwo assured that the government is addressing the challenge of the change in the fall of oil prices globally through diversified, self-sustaining growth in agriculture and agro-processing, solid minerals, manufacturing and ICT.
As stated by him; “ in the medium to long term, debt sustainability in Nigeria hinges on the overall sustainability of the economic, and the overall economic sustainability hinges on diversifying the economy in a sustainable manner.
“That is what the government is doing in agriculture, solid minerals, ICT and manufacturing. And to do that we need a strong infrastructure base and that is why government is spending what is borrowing on capital projects,” he also stated.
Guardian