The Center for the Promotion of Private Enterprise (CPPE) asserted that the proposed increase in Tertiary Education Taxes to 3% in the 2023 Finance Bill is too early, adding that businesses still face several macroeconomic hurdles. , structural, global and regulatory.
This was revealed by Dr. Muda Yusuf, Director of the CPPE in a report labeled “Adjusting the 2023 Finance Bill and Options to Unlock Revenue in 2023” and made available to Nairametrics.
The CPPE praised the president for withholding passage of the 2023 finance bill, as this would allow for broader consultation, participation and inclusion in the legislative process.
Too soon: They pointed out that the tax increase is one aspect of the bill, noting that less than two years ago, the tertiary education tax was increased from 2% to 2.5%.
- “It is too soon to propose another increase. In addition, companies still face various macroeconomic, structural, global, and regulatory hurdles. It will not be fair to increase the tax on tertiary education at this time.
- “This would place an undue burden on corporate entities on businesses and investors in the Nigerian economy.”
misplaced priority: They urged that using companies as a source of revenue to solve revenue problems “is completely misplaced.”
- “The perception of corporate entities as revenue streams to solve all revenue problems is completely misplaced. We should be much more creative in our revenue drive so as not to overburden the current crop of contributors. The tax base remains extremely narrow and should be widened.
- “The economy is approximately 50% informal, which means that the incidence of taxes falls largely on the formal sector of the economy.”
collection efficiency: The CPPE also urged that the focus in taxation should be on efficiency and improvement in tax governance.
- “The focus of taxation must be on the efficiency of collection, the expansion of the tax base and the improvement of tax governance. Revenue collection responsibilities should be integrated into a single agency for more efficient administration.
- “In addition, there are implicit taxes, as companies still have to provide supporting infrastructure and other facilities, such as power generation, water supply and the security of their assets. In some cases, companies build access roads to their facilities.
The CPPE added that numerous taxes, fees and levies are also paid to subnational governments and regulatory bodies that must be taken into account in the formulation of tax policies.
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Nairametrythan the CPPE CPPE) said the plan to discontinue the oil subsidy would unlock a minimum of N6 trillion in revenue in the Federation Account annually.
They noted that the Nigerian economy is heavily taxed and encumbered by two main subsidy regimes: the fuel subsidy regime and the foreign exchange subsidy regime, adding that huge sums of revenue can be unlocked from these subsidy regimes if the following measures are implemented. appropriate reforms.
The CPPE also warned that excessive business taxes have harmful effects on investment, economic growth, job creation and poverty reduction. As highlighted above, the effective corporate tax is currently around 34%, one of the highest in the world.