CEM REPORT | Nigerian Governors has made some recommendations for adoption by the Federal Government as measures to save the country from an impending economic collapse now strongly signaled by rising inflation, shrinking revenue inflow and huge debt servicing cost
According to a Premium Times exclusive report, the governors made some recommendations on taxation and others several areas of the economy and governance at a meeting with President Muhammadu Buhari in July.
On taxation, the Governors suggested the movement from State Income Taxation to Consumption Taxation, adding that with the introduction of 3% Federal Income Tax, state-level Personal Income Tax (PIT) be abolished.
Furthermore, they suggested that state Sales Taxes (flat rate of 10%) be enacted for the 36 States and FCT, VAT levels increased to 10% with a timeline to raise it to between 15% and 20%, as well as re-introduction and passage of VAT into the Exclusive List.
On tax revenue improvement, the governors propose an introduction of a flat 3% Federal Personal Income Tax (FPIT) on all Nigerians earning more than N30,000 per month, adding that persons earning less than N30,000 per month whether employed or not, including farmers and traders, should pay a monthly FPIT of N100.
Also, telecoms firms and NIMC should collaborate to ensure deduction of this from phone credit of individuals and linking to NIN and BVN.
The governors also suggested a centralization of the collection of all federal oil and non-oil taxes. They suggest that the Federal Inland Revenue Service (FIRS) be the centralised collection agency, while Customs, NPA, and others assess and issue demands.
Nigerian tax revenue collection rose to N6. 405 trillion in 2021 with VAT contributing a sum of N2.07 trillion, which is the highest VAT revenue so far after it was raised from 5% in
According to the 2021 VAT report the National Bureau of Statistics (NBS), Nigeria’s VAT revenue jumped by 35.4% in 2021 to N2.07 trillion from N1.53 trillion recorded in the previous year. It also represents a 75% increase compared to N1.18 trillion collected as VAT in 2019.
Still on 2021 VAT, N1.04 trillion came from local non-import VAT accounting for 50.2% of the total VAT revenue, while foreign non-import VAT yielded N564.12 billion, 27.2% of the collections in 2021.
Import VAT from the Nigerian Customs Service (NCS) totalled N467.68 billion, representing 22.6% of the VAT revenue.
A disaggregated breakdown of the data shows that the highest quarterly VAT was generated in Q4 2021, which is also the highest ever VAT revenue by Nigeria for any quarter.
A sum of N512.25 billion was generated in Q2 2021, N500.49 billion in Q3 2021, while N496.39 billion was collected in the first quarter of the year.