In the intricate tapestry of Nigeria’s economic landscape, the inefficiencies that mar its tax system stand as glaring impediments to progress and sustainable development. Like an intricate puzzle missing vital pieces, the flaws in Nigeria’s tax regime create a complex picture of fiscal instability and hinder the nation’s ability to harness its full economic potential.
At the forefront of these inefficiencies lies the issue of tax evasion and non-compliance. The lack of a robust and comprehensive system to track taxable income and enforce compliance allows a significant portion of the population, particularly in the informal sector, to slip through the cracks. This not only deprives the government of much-needed revenue but also fosters a sense of unfairness among those who dutifully fulfill their tax obligations.
Furthermore, the multiplicity of taxes at the federal, state, and local levels contributes to confusion and bureaucratic red tape. The overlapping jurisdictions and divergent tax laws often lead to double taxation, discouraging investment and hindering economic growth. The convoluted tax structure becomes a breeding ground for corruption, as businesses and individuals seek loopholes to minimise their tax burdens, perpetuating a cycle of inefficiency and diminishing the overall revenue pool.
Inefficiencies also manifest in the inadequate infrastructure for tax collection and administration. Insufficient technology and human resources create bottlenecks in the system, impeding the timely and accurate collection of taxes. This not only exacerbates the existing issues of non-compliance but also places an undue burden on the compliant taxpayers who bear the weight of an inefficient system.
The lack of transparency in the allocation and utilisation of tax revenues further compounds the problem. Without a clear understanding of how taxpayer funds are utilised, citizens may become disillusioned and less willing to contribute their fair share. This erodes trust in the government and weakens the social contract, hindering the collective efforts needed for sustainable development.
In essence, Nigeria’s tax system mirrors a fractured mosaic, with pieces scattered and misaligned. To unlock the nation’s true potential, a comprehensive overhaul is imperative—one that addresses the root causes of inefficiency, streamlines the tax structure, enhances enforcement mechanisms, and fosters a culture of transparency and accountability. Only through such transformative measures can Nigeria pave the way for a more equitable, efficient, and prosperous fiscal future.
The Tinubu administration has shown some resolve to tackle the above issues bedeviling the Nigerian tax system. It is hoped that he continues on that laudable path.
