The fiscal framework in Nigeria’s oil and gas and the entire energy industry, may no longer be “business as usual”, as Taiwo Oyedele, a vocal advocate for increased taxation of the energy sector, is now in charge as the country’s new Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, following his appointment by President Bola Tinubu on Friday.
Saddled with principal aim of transforming Nigeria’s tax system to support sustainable development and achieve a minimum of 18% Tax to GDP ratio within the next 3 years without stifling investment or economic growth, Oyedele’s tax reform committee has been empowered to implement sweeping tax law reforms, fiscal policy design and coordination, harmonization of taxes, and revenue administration.
This is however sending signals to tax evaders and those who have benefitted from unhealthy tax holidays in Nigeria’s energy industry players, to seat up – as President Tinubu’s government is showing all signs aimed at promoting stable and sustainable growth.
The committee would be expected to assist the new administration to generate public revenues that make it possible to finance investments in human capital, infrastructure, and the provision of services for citizens and businesses.
With the Petroleum Industry Act now in place, the Oyedele-led committee will be expected to focus more enabling the government to earn sufficient revenue from oil through the introduction of Company Income Tax(CIT) and Nigerian Hydrocarbon Tax(NHT) for upstream and other forms of taxes in the upstream subsector.
Oyedele’s appointment comes at a time when Nigeria’s economy is struggling, and the government is looking for ways to increase revenue.
EnergyDay is hopeful that the implications of increased taxation on the oil and gas sector as well as the wider economy, under his supervision, are likely to be significant.
HIS VIEWS IN THE PAST
Mr. Oyedele, as the Fiscal Policy Partner and Africa Tax Leader at PriceWaterhouseCoopers (PwC), once hinted that Nigeria is a country that is often celebrated more for its potential especially as one of the largest producers of petroleum resources in the world, with one of the largest proven oil and gas reserves, while the people are poor.
* Compared to other sources of revenue, tax revenues can be relatively predictable, and governments are able to plan with a greater amount of certainty than when relying majorly on natural resources.
* The tax revenue generating capacity of the Nigerian economy is yet to be harnessed and that the current tax system is ineffective in many ways, adding that for Nigeria to improve the tax revenue to GDP ratio, tax collection must grow faster than GDP.
* Nigeria’s tax regime is unnecessarily cumbersome and notoriously unfriendly to taxpayers, suggesting that clearly a lot needs to be done to make tax compliance less onerous for the average taxpayer.
* .Nigerian Government needs to introduce simple rate cards and tax calculation templates as well as a bouquet of all the applicable taxes levied by governments at all levels should also be readily available and accessible to all.
*To increase public confidence and promote a positive taxpaying culture, leaders and politicians must lead by example. We must scrutinize the tax records of current and aspiring political office holders in order to break the vicious cycle of tax conspiracy.