Nigerian Senate has asked the Federal Government to consider increasing taxes on luxury goods and services to boost revenues. The Senate Committee on Finance made the recommendation on Tuesday during a plenary session. The committee also urged relevant agencies to continue exploring ways of generating additional revenues to reduce the government’s fiscal deficit. It said, “The Federal Government should harness the full optimal potential of the Federal Ministry of Mines and Steel Development in terms of revenue generation to minimise the level of borrowing. “The Federal Government should consider reducing the granting waivers and exemptions while ensuring that the Nigerian Customs Service personnel are at all oil terminals for accountability and the Federal Inland Revenue Service should consider increasing tax on luxury goods and services.” The committee said the 20 per cent operating surplus to be remitted by government-owned enterprises should be deducted at source.
The Federal Government has been trying to raise revenues in the face of lower oil prices after the country recovered from a recession that slashed public finances, weakened its currency and cut spending on capital projects. The country, which has one of the lowest tax rates on the African continent, relies on crude oil sales for much of government revenues. In the past, the government had mulled the idea of raising taxes on luxury goods to 15 per cent from the current rate of five per cent, to boost its tax to GDP ratio to 15 per cent from six per cent between 2017 and 2020. But collection has been a major challenge in a country where many small businesses are not registered. Also, economists say the timing of a tax hike will be closely watched as companies and consumers face cost pressures in a time of slow growth, according to Reuters. The Senate said the government was budgeting for a deficit of N1.86tn in 2019 to be funded via borrowing, privatization proceeds and loans secured for specific projects.