Economic experts have called for quick resolution of the lingering war over Value Added Tax (VAT) and consumption tax between the federal and state governments for economic growth and development.
They said this at the Nairametric’s 2022 Economic Outlook webinar on Saturday in Lagos with the theme: “Your money, the economy and government policies.”
Speaking at the event, Mr Liborous Oshoma, Head Attorney at the Liborous Oshoma Chambers, said the lingering VAT war between the federal government and states was not good for the economy.
Oshoma suggested that the concerned parties should sit down at the Federal Accounts Allocation Committee (FAAC) and find a resolution to the issue.
Also speaking, Mr Olufemi Babem, Partner, Tax, Regulatory & People Services at KPMG, said the VAT war issue should be solved without further delay.
Babem said the governors and president should sit down together and find a political solution to the issue.
Speaking on the “Economic impact of government’s tax revenue drive,” he said the 2022 budget deficit of N6.39 trillion needed to be funded, noting that government would be aggressive in revenue drive.
He noted that the 2021 Finance Act had many amendments that would increase domestic revenue mobilisation, tax administration and legislative drafting, international taxation and financial sector reforms as well as tax equity, among others.
On expected fiscal changes, Babem said Nigerians should expect an increase in effective rate of tax on corporate profits by about 0.6 per cent, broadening the corporate income tax base for profit oriented educational institutions and foreign companies providing services to Nigerian beneficiaries.
According to him, taxation of the digital economy such as Twitter, Microsoft and Netflix will expand Nigeria’s tax base.
Babem noted that government should deploy digitisation in tax collection to expand the country’s tax base instead of embracing constant tax increment.
He called on Nigerians to prepare for increased tax authority action and review business and operating structure to optimise tax position.
Mr Andrew Nevin, FS Leader PWC West Africa, said Nigeria needed to improve the business environment to drive growth and development.
Nevin stressed the need to drive export growth through services, unlock dead assets, move informal to formal sector and harness the power of the Diaspora, among others.
He noted that digitisation of tax system was in the right direction to increase tax revenue.
Nevin added that raising taxes would be very problematic due to the challenges in the country occasioned by the COVID-19 pandemic.
Mrs Adetoun Dosunmu, Head, Fixed Income, Currencies & Treasury, FBNQuest Merchant Bank, said inflation would be on the rise due to electioneering activities with increased money in circulation.
Dosunmu predicted that interest rate would be increased in the year due to high inflation rate and the need to fund budget deficit.
“If you want to attract FPI, you need to increase your interest rate.
Rates will go up and there is budget deficit to be funded and the suspension of subsidy removal will gulp another deficit of about N1.2 trillion,” she said.