The Minister of Finance, Budget and National Planning, Zainab Ahmed, has on Monday, revealed that Nigeria has the lowest tax rate in the world, warning Nigerians to not compare the country which borrows heavily to fund its national budgets yearly, to South Africa, who she said funds its national budgets largely on the taxes collected in the country, Page 36 learnt.
The Minister spoke while defending the President Muhammadu Buhari Federal Government’s Medium Term Expenditure Framework and Fiscal Strategy Paper.
Her exact words: “The comparison between Nigeria and South Africa cannot be done. The Federal Government national budget and South African national budget are not proportionate. It is important to state that the South African budget is largely funded by taxes, unlike Nigeria’s economy. The tax base in Nigeria is still narrow. The tax rate is still quite low, VAT is still 7.5%, the average VAT rate in West Africa region is 15%.
“We have the lowest tax rate in the world, second only to Sudan. Even Sudan is increasing its VAT rate. We need to all efficiently improve tax collection. In Nigeria, PIT is very low. Individuals of high net worth, only a few of them are paying taxes.”
The Minister of Finance’s comment is coming amid plans by the Federal Government to borrow over N11 trillion, to finance the deficit in the proposed expenditure of the Federal Government.
In the document submitted to the Lawmakers, the Federal Government plans to borrow N9.32 trillion, comprising of N7.4 trillion from the domestic market, and N1.8 trillion from foreign sources. The government is expected to generate N206.1 billion from privatisation proceeds, and N1.7 trillion multilateral project-tied loans.
She added that the government cannot afford to keep subsidy beyond June 2023, as it is not planning for subsidy beyond mid 2023.
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