The Federal Government is targeting 15 per cent tax contribution to the Gross Domestic Product (GDP) through improved tax collection strategies, the Minister of Budget and National Planning, Senator Udo Udoma, has said.
Udoma stated this in Lagos at the private equity summit organised by Udo Udoma and Belo-Osagie Law Firm with the theme “Nigeria: Still Open for Business”.
He said that Nigeria’s GDP ratio presently at six per cent was one of the lowest in the world when compared with India’s 16 per cent, Ghana’s 15.9 per cent and South Africa 27 per cent.
Udoma said that government would achieve the target through improved tax collection and not increment in tax rates.
“We don’t want to increase our tax rate but we want to increase tax collection to achieve the desired growth”, he said.
The minister said that the target would be achieved through Voluntary Assets and Income Declaration Scheme (VAIDS) that promotes voluntary tax compliance.
Udoma said that the present government’s strategic focus was to increase revenue generation to reduce reliance on borrowing to fund the budget.
He said that effective implementation of the Economic Recovery and Growth Plan (ERGP) would lead to increase in revenue generation.
The minister explained that government want to grow both the oil and non-oil sectors to boost revenue generation.
He added that government had increased oil production to 2.5 million from 2.2 million barrel per day with peace in the Niger Delta.
According to him, government will continue to engage the Niger Delta region to maintain peace and stable oil production.
He said that the Buhari administration had rebalanced borrowing proportion with more concentration on foreign borrowing to reduce its crowding out effect of private sector for credits.
“When we came in as an administration, we were faced with recession. And to get out of it was to spend and this led to increase on borrowing”, Udoma said.
He said that the recession led to increase in government’s borrowings, noting that, going forward, government would rely more on foreign borrowings.
“Right now it is 20 per cent foreign borrowing and 80 per cent domestic.
But we want to increase it to 40 per cent borrowing to reduce the crowding out effect”, he added.
The minister said that the Federal Gvernment would continue to provide an enabling environment for business to thrive.
He called on the private sector to collaborate with the government to achieve the desired growth and development.
Udoma said that the role of government was to create an enabling environment for innovation and productivity, noting that real growth would come from the private sector.
He said that government’s short-term policy strategic implementation plan and ERGP had yielded result with enhanced investor confidence.
“When we came in, investments were going away due to drop in oil prices but we came out with short-term and long-term polices that boosted investor confidence”, Udoma said.
He said that the World Bank had identified Nigeria as one of the 10 top economy in the world.
On the effect of electioneering on the economy, Udoma said that government would remain committed to its policies and strategies to ensure sustainable growth.
According to him, investors should not slow down because of election because with good government re-election will not be an issue.
He said that election would not change government direction, noting that people should continue to invest in the country.
“The direction Nigeria is going now is the direction that everybody will support”, Udoma said.