The harmonisation of taxes will propel the impact of economic diversification in Nigeria, Mrs Oso Afolake, an Assistant Director, Chartered Institute of Taxation of Nigeria (CITN), has said.
Afolake told the News Agency of Nigeria (NAN) on Thursday in Lagos that taxation remained the viable means of revenue for the three tiers of government and their financial independence.
According to her, harmonisation of tax system can only be achieved, if the issue of tax evasion is nipped in the bud through enforcement of tax laws and effective regulations.
“It is only when the government strengthens operation of taxation system and other sectors of the economy that the impact of diversification will be greatly felt,” the tax expert said.
Afolake decried the current situation where Nigeria depended on oil sector as its major source of revenue for decades, saying such situation was unhealthy for a developing economy.
She said the various levies and tax collection channels of the government were enough to cater for most of its financial needs if effectively structured and adhered to.
“Our taxation system is full of loopholes which have rendered it ineffective and unable to satisfy the targeted objective.
“In other countries where the taxation system is effective, it is solely revenue from levies and taxes that the government uses to run its affairs,” Afolake said.
The tax expert urged the Federal Government to see taxes as sources of financial relief, saying limiting the diversification move to one or two areas might not bring much impact.
“If an economy is diversifying, it means such an economy is undergoing transition in terms of production, attitude, culture and behaviour.
“So, if truly Nigeria is diversifying its economy, it has to streamline the taxation system to be more resourceful such that it can rely on it for economic sustenance like other countries,’’ she said.
According to her, research reveals that tax avoidance practices by multinational corporations hit developing countries hardest and must be stopped in order to meet the Sustainable Development Goals.
“By restructuring outdated tax laws and then improving enforcement of these laws, a developing country like Nigeria can close the gap between policy and implementation and collect billions in public revenue,’’ Afolake said.
She identified weak tax laws and incapable tax administration infrastructure as key barriers to efficient tax system and recommended strengthening of legal and regulatory systems of tax administration.
