Tax reform systems are primarily aimed at financing public expenditures which are targeted towards meeting specific economic and social needs of people. Many countries have discovered that most propitious time for tax reform is when the economy is in depression or public finances allows an overall reduction in taxes.
President Buhari’s campaign on positive change in economy would be incomplete without at least an X-ray on tax reform that will add values to the dwindled foreign reserves.
Economic growth-oriented tax reform measures include reduction in top marginal personal and corporate taxes and tax base broadening with well-designed offshore taxation model. Policy discussions in this area should preferably be supported by internationally comparable statistical information on fiscal relations between levels of government, for local and offshore taxation. Reasons why professionals, businessmen and governments invest offshore include: assets protection, confidentiality, diversification of investments and tax reduction.
Corporate act is a protector for investors’ accounts, shielding them from the possible higher tax burden that would be incurred in their home country. Some countries rely extensively on attracting remittances from citizens abroad to boast GDP rather than taxation. The government could create an enabling environment for Nigerians owing companies abroad to move their head offices to Nigeria and benefit from reduced tax.
The federal government should look at revising the Nigeria corporate acts to attract would be external investors to pay taxes in line with best practices around the world with supportive statistical information.
Nearly every other country in the world bases its tax system on residency rather than citizenship. For example, if you’re a Nigerian citizen and live in Botswana to become a resident of and earn income in Botswana, you would not have to pay taxes on that income to the Nigerian government. If you were an Eritrean citizen, on the other hand, you would have to pay taxes to the Eritrean government no matter where you live and work.
Although critics may view this taxation act as an exhortation and repressive measure. However, citizens of a country are expected to demonstrate a reasonable degree of patriotism and should support any form of progressive taxation that could lead to socio-economic development.
A socio-economic offshore tax on Nigerian professionals, businessmen-women that reside legally around the globe would boost the economy; and improve the system of national accounts (SNA).
The Federal government should empower the Federal Inland Revenue Service (FIRS), Ministry of Foreign affairs and Bureau of Statistics to conduct empirical survey that will reveal the taxation models for Nigeria citizens and residents. Such a study would lead to a better understanding of what factors will form the core benefits for would be subscribers.
GUARDIAN
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