Despite the rampage that has greeted the recent hike in various taxes in Nigeria, Bill Gates, co-chair of the Bill and Melinda Gates Foundation, says Nigeria’s tax collection is too low to cater for the health and other basic infrastructure deficit in the country.
“…do a comparison of Nigeria tax collection to whatever country you think is comparable. The taxes are too low to fund the infrastructure, education system, and the health system,” Gates told TheCable in an exclusive interview.
“Nigeria has about the lowest domestic tax collection of any country in the world, so it is very tough to fund infrastructure and education,” he added.
Gates’s sentiment is one of the problems Nigeria is facing as tax compliance is very low in the country with over 200 million people. According to the Federal Inland Revenue Service, the country’s total tax collection in 2019 was N5.26 trillion ($13.5 billion).
This means that the 3.1 million registered businesses in Nigeria as reported by the Corporate Affairs Commission in March 2019, paid N1,710 each for the whole of the year. This is a poor figure considering the tax payments by publicly listed companies and the remittances from the oil and gas sector, and for a country where companies pay a minimum tax irrespective of their profitability.
In September 2018 the Nigerian Bureau of Statistics (NBS) puts Nigeria’s population of employed persons at 69.5 million people but the individual tax-paying population is estimated at 19 million.
This means about 50.5 million employed Nigerians are tax evaders – a figure that almost equal Ghana’s (31,072,940) and Zambia’s (18,383,955) total population, according to statisticstimes.com.
To bolster the country’s economy, the Nigerian government earlier this month approved an increase in electricity tariff prices and also removed costly fuel subsidies.
In February, Nigeria also increased VAT to 7.5% from 5% to boost revenues. All the government efforts were in a bid to boost income as part of efforts to diversify its economy to reduce dependence on sales of crude oil.
But with a history of official embezzlement and large-scale corruption by government officials, many do not feel the need to pay tax.
The recent increase in electricity tariff and pump price has continued to generate widespread criticisms and complains from Nigerians.
Gates also expressed worries that “people always complain about taxes. But if they know the taxes are being spent on viable services, less so”
The billionaire philanthropist said, “there needs to be good dialogue, the politicians need to be open about “what are the services that you want, and here is how we are going to provide them in a better way” and simply, the subsidy is not the most effective way to do that.”
“Again, it’s up to the local political process to make those decisions but the awareness of the scarcity of resources should be part of that dialogue,” he added.