Informal sector of the economy are biggest tax evaders
The informal sector of the Nigerian economy comprising of people at the bottom of the pyramid are the biggest tax evaders.
Minister of Finance, Mrs. Kemi Adeosun, said this while fielding questions from the media at a campaign in Lagos on the Voluntary Asset and Income Declaration Scheme (VAIDS).
Asked whether proceeds from begging are taxable, she said: “There are so many tax evasions at the lower end, we will continue to sensitize. VAIDS is open to everybody, some beggars are earning millions, and we will look at their life style.
“Life style may not matter sometimes, proceeds from begging are taxable, beggars are supposed to pay tax even if their source of income is begging. Our non-formal sector is one of the hardest and that is where one of the biggest tax evasion occurs and that is what data is helping us to correct,” she said.
Adeosun who said that VAIDS is a credible platform put in place for defaulting Nigerian taxpayers to work out a flexible way to pay their outstanding tax liabilities. According to her, “Nigeria’s tax to gross domestic product (GDP) ratio at just six per cent is one of the lowest in the world, compared to India’s 16 per cent, Ghana’s 15.9 per cent, and South Africa’s 27 per cent. Most developed nations have tax to GDP ratios of between 32 per cent and 35 per cent.”
President/Chairman of Council, Chartered Institute of Taxation of Nigeria (CITN), Chief Cyril Ede, said that the coming of VAIDS has been described as a tax revolution, which would change virtually all the anomalies and poor orientation to taxation in the country.