The Nigeria Employers’ Consultative Association (NECA) has warned that any attempt by the Federal Government to increase taxes would lead to negative impacts on households, individuals, and businesses.
In a statement Sunday, NECA’s Director-General, Adewale-Smatt Oyerinde said such a move would only lead to disaster for an economy struggling to stay afloat.
Oyerinde was reacting to a recent recommendation by the International Monetary Fund (IMF) that the government increases taxes in order to reduce borrowing. The IMF urged the government to reduce its debt by focusing on increasing the tax basket and compliance as a means of generating revenue to cut borrowing.
But Oyerinde said: “For a private sector already overwhelmed by multiple taxes, the imposition of additional taxes on services will make the business community more vulnerable with a trade-off on growth and job creation.
“More taxes, of course, will weaken the purchasing power of individuals and stifle consumption, with attendant consequences for social cohesion. It may defeat any attempt to widen the tax net as taxpayers would consider tax avoidance measures. There will be massive capital flight, and the drive for direct foreign investment could be defeated.”
The director-general said, however, that government should consider widening its tax net as the association had posited on many occasions and at various forums. He said also that the association was in support of the IMF’s recommendation to the government to consider widening its fiscal net, saying “it is the way to go”.
