The Minister of Finance and National Planning, Zainab Ahmed,
has warned Nigerians against comparing Nigeria with South Africa.
She stated that South Africa is a tax-based economy, while
Nigeria on the other hand is competing with Sudan in the area of taxation.
The minister disclosed this on Monday while defending the
government’s Medium Term Expenditure Framework and Fiscal Strategy Paper.
According to the minister, most high earners in Nigeria are
not paying taxes, particularly at the state level.
“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
networth—only a few of them are paying taxes,” he said.
This 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 N7.4 trillion from the
domestic market and N1.8 trillion from foreign sources. The government is
expected to generate N206.1 billion from privatization proceeds and N1.7
trillion multilateral project-tied loans.
She added that the government cannot afford to keep subsidy
beyond June 2023. As the government is not planning for subsidy beyond mid
2023.
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