President Bola Tinubu set up a panel to reform the country’s tax laws and fiscal policy in a bid to boost revenue generation and curb borrowings.

The committee to be headed by Taiwo Oyedele, fiscal policy partner and Africa tax leader at PricewaterhouseCoopers LLP, will work to “enhance revenue collection efficiency, ensure transparent reporting, and promote the effective utilization of tax and other revenues,” the president’s media office said in emailed statement on Friday. 

The government plans to transform the tax system to support sustainable development and achieve a minimum tax to gross domestic product ratio of 18% within the next three years, it said.

Nigeria’s tax revenue as a share of GDP was 10.9% in 2021, well below the 34.1% average from members of the OECD.

Low revenue collections have meant Africa’s biggest crude producer has relied significantly on borrowings to meet its public expenditure needs, complicating government efforts to rein in debt and fund infrastructure, education and health projects.

Since 2015, Nigeria’s public debt has increased seven-fold to about 77 trillion naira ($100 billion), according to the country’s Debt Management Office. Servicing those obligations consumed 96% of government revenue in 2022. 

The tax reforms “will not only improve Nigeria’s revenue profile but also create a more conducive and internationally-competitive business environment,” Adelabu Adedeji, special adviser to the president on revenue, said in the statement.

The creation of the committee comes a day after Tinubu suspended excise taxes on telecommunications services and some locally produced goods introduced two months ago to reduce business costs.

Since taking office on May 29, Tinubu has ended a fuel subsidy that cost $10 billion last year, removed a controversial central bank governor and eased foreign-exchange controls.

Bloomberg