There is Need to Introduce Luxury Tax in Nigeria – DMO

Going by the way Nigerians spend on luxury goods in the world, the Director-General, Debt Management Office (DMO), Dr. Abraham Nwankwo, has stressed the need for the introduction of special taxes on luxury items in the country.
Nwankwo made the call at a retreat for members of the Senate Committee on Local and Foreign Debts held in Uyo, Akwa Ibom State, at the weekend. He argued that such levies would generate enough revenue into the purse of the Federal Government.
According to him, revenue from luxury taxes would also be used to provide goods and services for the generality of the people and also cater for those who are not gainfully employed.
He said by having regular interactive sessions and retreats with senators on the country’s economy, it would update their knowledge on of development with regards to the economy, particularly as the issues relate to public debts management.
Such knowledge, he said, will enable the senators do their jobs effectively in terms of oversight functions on public debt management and also by making useful contributions in the country’s upper legislative chamber.
Presenting a paper on the topic: ‘Implications of Rebasing of Gross Domestic Product (GDP) for Public Debt Management,” he frowned on the state of the nation’s dwindling revenue, pointing out that even though after rebasing, Nigeria’s GDP has become higher; the country’s borrowing space is small.
The Director-General explained that rebasing results showed that the country needs to do more in terms of revenue collection in order to ensure that as the GDP is growing, government revenue will also be growing, leading to having enough resources to solve the country’s problems.
Nwankwo maintained that for the country to overcome the shortfall in its revenue, government has to realise more revenue from taxes; fees; penalties; and royalties.
“After rebasing, Nigeria’s GDP became much bigger from about N42 trillion to over N80 trillion. So, in terms of debt GDP ratio, it means that our debt GDP fell. That gives an impression that our borrowing is small relative to our GDP.
“Special taxes should be introduced on luxury items so that there will be more revenue to provide goods and services for the generality of the people and to cater for those, who are not gainfully employed in terms of making sure that every child in Nigeria attends schools.
“This means that both individuals and companies need to make sure that they pay their taxes on time and in full. Measures need to be taken against those who are not paying taxes.
“If every child in Nigeria has to attend school, it means that governments at the federal, state, and local levels will provide the resources to cater for such people, so that no Nigerian child is left out of school and no Nigerian citizen is not in a position to develop themselves to higher level in terms of education and skills.
“So, the bottom line is that our debts are sustainable if we use the statistics of the rebased GDP. We will be under illusion that we have more borrowing space.
“But the emphasis is that we do not have more borrowing space because GDP has increased; we do not service debts with GDP, but with revenue and revenue is suffering some setbacks in terms of its sizeability to the GDP,” he said.
The DMO Director-General equally noted that Nigerian debt profile is about the lowest compared to other African countries.

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