- Set To Unveil Digital Identification Platform To Ease Tax Collection
- It Will Enable More Bank Accounts, Financial Inclusion, And Effective Govt Payment Programmes
- Tinubu Identifies Technology As Potential Weapon Against Corruption
As Nigeria moves to shore up its tax collection, indications have emerged that the Federal Government of Nigeria and Bill Gates, former Chief Executive Officer (CEO) of technology giant Microsoft are working towards a system that will create room for the easy collection of tax.
The digital identification platform is called MOSIP ID, and will emerge as the potential application in all government payment programmes.
The Matrix reports that Wale Edun, Finance Minister And Coordinating Minister Of The Economy, had earlier raised the alarm that Nigeria’s tax-to-Gross Domestic Product (GDP) ratio is low because citizens are not paying their taxes.
However, to boost the tax collection rate, the government instituted a flurry of reforms. The federal government had, on October 25, 2023, received 20 policy reform recommendations from its tax committee billed for quick implementation.
The panel was created in July 2023, two months after President Bola Tinubu took over to harmonise taxes and coordinate revenue collection.
Although 50 percent of revenue generated by government-owned enterprises and ministries, departments and agencies (MDAs) is already being deducted automatically, Nigeria’s tax authority is pushing for a single-window revenue collection system to “cut leakages”.
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It is the hope of the government that the reforms would significantly increase Nigeria’s revenue, and most importantly, help Tinubu achieve his $1 trillion economy dream.
But speaking at the forum, Edun said at 10 percent, the contribution of tax to the country’s GDP is still low.
“The starting point really is that 10% to GDP, you can see that people are not paying their taxes? So, there really is a lot of room without actually hiking tax rates,” the minister said.
“As I explained before, it is digitisation, and application of technologies that will take us there more than before. For instance, using an efficient process for assessing, for billing, for collection and for monitoring what comes in.
“So, we are comfortable that we will be able to, over the next three, four years, double tax revenue as a percentage of GDP. It is very low, where it is now even by our African peers.”
Edun said the 2024 budget “has a significant 60/70% increase” in overall government revenue projected because Nigeria needs to borrow less and focus more on domestic resource mobilisation from taxes from other government revenue – including oil.
The economist said taxation without necessarily increasing the rate of taxes but improving the efficiency of administration and collection is the way to shore up government revenue in a non-inflationary way.
However, there has been a clamour for an efficient system to be put in place.
“Let me give you an example: throughout Nigeria, there are about 80-something taxes that people will bring you assessments at the local governments and the state level, even agency level,” he said.
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“They will bring you all kinds of bills and invoices. And the analysis we have done shows that there are nine major tax revenue heads, withholding tax, and of course, income tax, and so on and so forth, that produce 90 percent of your revenue.
“So, if we can do away with some of these taxes, you wouldn’t lose much. And then you would pay in terms of people’s willingness to pay.”
According to the minister, if taxpayers are given an efficient system, and are billed properly, “that does help with the ability to collect taxes”.
Perhaps in an apparent move to address this, Bill Gates, while speaking with Tinubu on the sidelines of the World Economic Forum (WEF) in Saudi Arabia on Sunday, disclosed that he is working with the federal government (FG) on an identity technology platform for easy tax collection.
According to a statement by Ajuri Ngelale, the presidential aide, Gates said the technology would help with payment efficiency and also make tax collection easier.
“We are working with Mr. Wale Edun on digitisation,” Gates said.
“Before you came into office, there were a few things attempted in identity management. But they have been very scattered. There have been multiple identification systems.
“Now, there is a plan to take that technology called MOSIP and use it for this identification platform so that people can get digital benefits. We are providing support for that, and we can provide more support.
“With MOSIP ID, there is potential application in all government payment programmes.
“It helps with payment efficiency and bank accounts, and eventually, when everyone is using that, it makes tax collection easier.
“That benefit will take a few years. However, there will be more bank accounts, more financial inclusion, and effective government payment programmes.”
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Also, the co-chair of the Bill and Melinda Gates Foundation, the businessman said Nigeria has the capacity to manage “this system and related-technological systems as the nation brims with talented youths”.
In his remarks, Tinubu said his administration will look into the technology proposed and work on it further.
He said technology is a potent weapon against corruption and financial impropriety in public service.
The president reiterated his unwavering commitment to providing reliable technology that will support a national consumer credit system and many other critical interventions for all Nigerians.
He said resistance is often expected when efforts are made to strengthen systems and forestall malfeasance.
“Technology is the enemy of fraud, corruption, and irregularity. We have been working hard on improving technology,” Tinubu said.
“There is always the initial resistance.
“Corruption, self-interest, and fraudulent activity will always be an enemy, but when you bend that curve, you will receive the benefit. The nation will receive the benefit.”
Recounting how he deployed technology to enhance the revenue base of Lagos state during his time as governor, Tinubu said his administration must invest in technology, especially as the state aims to achieve a trillion-naira revenue target.
