THE Federal Government has been advised to review its policy on tax incentives, which is currently costing the country a loss of over N580 billion revenue annually.
The Country Director, of OXFAM Nigeria, an International non-government organisation (NGO), Constant Tchona gave the advice Wednesday in Abuja at the presentation of the Fair Tax Monitor Index Report and the Commitment to Reducing Inequality Index Report.
Asking government to make tax laws gender-friendly and more equitable to women as drivers of micro and small businesses in the country, Tchona also urged the government to consider making Value Added Tax (VAT) more progressive by charging more for luxury goods than service items.
This, he said would help to reduce wealth inequality in the country.
Tchona said studies had shown that the fiscal incentives granted with the hope of stimulating investments in the country were eroded by poor governance and lack of transparency.
He said that there was no-cost benefit analysis to justify the exemptions.
Tchona said that in the spirit of fair taxation, the process for granting tax incentives should include mandatory parliamentary oversight, clear requirements for incentives and periodic review of expected results.r
He said: “The National Assembly should enact a law that will criminalise the actions of banks, auditors, accountants and lawyers that facilitate illicit financial flows.
“When such professionals act contrary to existing regulations, they should be held accountable in Nigeria. This can be enforced through strengthened professional association bodies.
“There is also need for the Nigerian government to fast-forward action on the new National Tax Policy and clamp down on corporate crimes.
“New legislation and rules to cope with current realities should be enacted along with introduction to cutting-edge technology.
“VAT exemption for building materials will have a direct positive bearing on middle and poor class segments of the population and make rent cheaper, thereby reducing housing deficit.
“It is also important to increase direct tax net rather than increasing burden of indirect taxes like VAT.
“Establishing a more progressive tax system will make it possible for government to deliver on essential public services like education, health and social protection, among others.”
According to News Agency of Nigeria (NAN) reports, a 2015 OXFAM report highlights the inefficiency of Nigeria’s tax incentives where it reported that the country loses N580 billion annually through tax incentives to multinationals.
The study also showed that Nigeria, Ghana and Senegal had a combined loss of over 5.8 billion dollars yearly.
The report further showed that tax incentives werte not the priority for investors, rather they looked for infrastructure, education and the quality of the workforce.
In a related development, a report of the Federal Inland Revenue Service (FIRS) shows that about 30 per cent of companies in Nigeria were involved in tax evasion and 25 per cent of registered companies in the country were not paying tax.