Nigeria's finance minister, Kemi Adeosun
Nigeria’s Minister of Finance, Kemi Adeosun

Nigeria’s Minister of Finance, Kemi Adeosun, on Wednesday, presented and got approval for a new national tax policy.

This was disclosed by the minister herself at the conclusion of the Federal Executive Council (FEC) presided over by Acting President Yemi Osinbajo.

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Though approved by the FEC, its acceptance into law is still dependent on the approval of the National Assembly.

According to Adeosun, the new tax policy is an improvement on the old one which, in comparison with the rest of the world, is the lowest tax to Gross Domestic Product (GDP) ratio with tax only contributing just 6 percent to the GDP. This would be fixed while an efficient tax system would be entrenched.

She said:”What the committee has shown is that we should look at actually increasing the value added tax (VAT) on some luxury items.

“At five per cent we have lowest VAT and whilst we don’t think VAT should be increased on basic items, if you are going to drink champagne… you drink champagne in the UK and VAT is 20 per cent, why should it be five per cent in Nigeria. So they have made recommendations that we should pull out some luxury items and increase VAT on those items immediately.

“And I think that is a very valid and sensible suggestion which we are going to talk to the National Assembly about, to see how we can implement it; but as far as basic goods are concerned, no. I believe it is only fair that when you consume luxury goods, you should pay a little bit more. The National Assembly will decide the percentage,” she stated.

The new policy has integrated into it tools to enable the overhauling of the old and inputting such innovations as a dedicated tax policy website; an office of tax simplification; mandating the electoral body, INEC, to direct political parties to articulate tax agenda during elections; and setting up of a tax policy implementation committee.

The Leadership Newspaper report that the policy would aim to ensure only “one revenue agency per level of government; setting aside a uniform day in the year as a National Tax Day; national and state assemblies establishing a taxation committee, and the review of the Joint Tax Board (JTB) Act to give it a mandate beyond its current advisory role.”

The minister noted that the primary aim of the policy is to establish fundamental principles to guide an orderly development of the Nigerian tax system and an administrative framework for amnesty and whistle-blowing, develop key performance indicators (KPIs) and reinforce the centrality of the Ministry of Finance in the formulation and implementation of tax policy in Nigeria.