The National Bureau of Statistics (NBS) has released a report indicating a notable surge in Nigeria’s tax-to-gross domestic product (GDP) ratio for the year 2021.
The ratio has been revised to 10.86 percent, a substantial increase from the previously reported 6 percent figure.
The NBS report, titled ‘Tax-to-GDP Ratio Revised Computation (2010-2021)’, highlights the incorporation of relevant revenue collected by other government agencies in the revised calculation.
This comprehensive approach aims to provide a more accurate representation of the country’s tax revenue relative to the size of its economy.
Typically, developed nations boast higher tax-to-GDP ratios than their developing counterparts.
According to the World Bank, tax revenues exceeding 15 percent of a country’s GDP are crucial for fostering economic growth and, ultimately, poverty reduction.
To achieve a more precise measurement of Nigeria’s tax-to-GDP ratio, the report signifies a collaborative effort between the Federal Inland Revenue Service (FIRS), the federal ministry of finance, and the NBS.
It underscores the importance of enhancing the accuracy and reliability of this economic indicator.
The data utilized in the revised computation were sourced from various governmental entities responsible for revenue collection, including the office of the accountant general of the federation (OAGF), FIRS, Nigeria Customs Service (NCS), Joint Tax Board (JTB), NBS, and other relevant agencies.
“The new figures are revised and updated numbers to reflect better data sources and improved estimation using the Organisation for Economic Co-operation and Development (OECD) manual,” the NBS said.
“The OECD manual is an improvement over the System of National Accounts (SNA 2008) classification of taxes.
“Although the System of National Accounts conceptual framework and its definitions of the various sectors of the economy are reflected in the OECD’s classification of taxes, the OECD classifications provide the maximum disaggregation of statistical data on what are generally regarded as taxes by tax administrations.
“The revised computation took into account wider coverage of data at the Federal, State, and Local Government levels, and revenue items not previously included in the computations, particularly, relevant revenue collected by other agencies of government.
“At the end of 2021, the tax-to-GDP ratio stood at 10.86% for Nigeria compared to an estimated 6% previously reported.”
