Bringing informal sector to tax net will tackle budget deficit, boost revenue — FIRS chairman

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By Mustapha Sumaila

Abuja – Mr Muhammad Nami, Chairman, Federal Inland (FIRS) bringing informal sector to tax net will tackle deficit and increase in country and Africa.

Nami said this at the 9th African Tax Administration Forum’s (ATAF) Country Correspondents Conference and Taxation of informal sector in Abuja Tuesday.

He explained that those that constituted the informal sector were huge and could contribute significantly while paying their taxes, thereby addressing deficit in Nigeria and other African countries.

Nami, also the chairman of ATAF said was estimated that the informal sector in Africa constituted between 21 to 70 per cent of Gross Domestic Product (GDP) of African countries.

According to him, the above figure, the sector accounts for between 30 to 90 per cent of employment and generation.

The chairman said that in spite of the large size of the informal sector, was the most difficult to tax.

He added that most of the businesses operating in the sector were concealing their activities from tax authorities wherever they operated.

Nami said such businesses also operated a cash risk and maintain a and no accounting records, adding that most of those businesses were small and fragmented which made inefficient for revenue administrators to enforce compliance.

“Taxing the informal sector is also critical because it will ensure that there is a perception of fairness in the tax system.

“Those who operate in formal sector view it as unfair that they are paying taxes while those in the informal are not. Those in informal sector use infrastructure built the formal sector taxpayers’ money which is injustice,’’ he explained.

Nami said the was to strategise, exchange and views aimed at advicing tax authorities and government of African countries the need to bring the informal sector board the tax net.

Earlier in his remarks, the ATAF Executive Secretary, Mr Logan Wort lamented that the continent’s tax to GDP ratio was , the reason they brought tax authorities and together to discuss the way forward.

Wort said that the tax to GDP the continent was largely due to tax evasion, adding that the informal sector huge impact must be brought to tax net.