Home Economy Finance Minister laments £360m capital flight to UK education sector

Finance Minister laments £360m capital flight to UK education sector

by Business News Report

Minister of Finance Mrs Kemi Adeosun has lamented the rate at which Nigerians send their children to school in the United Kingdom that has cost the nation £360 million annually. This she said is capital flight by Nigerians who hardly pay any form of tax to Nigeria government. Adeosun said that the country cannot continue to have a situation where Nigerians alone pay £360 million in the UK for school fees where the tax return of many of the people paying these fees have no connection with their life style and the tax they pay.

Speaking at an interactive session on Voluntary Asset Declaration, VAIDS awareness/Tax organised by PwC in Lagos, Adeosun said that the circle of non compliance must be broken because it is a destructive circle that is not allowing Nigeria to grow, adding that tax is an obligation for every citizen and not an option. She also said that the discovery of oil in commercial quantity is the bane of Nigeria’s tax system. She said that the poor tax compliance in the country is affecting economic growth negatively. This she said has necessitated the introduction of Voluntary Assets and Income Declaration Scheme (VAIDS) .

VAIDS according to the Minister is a time-limited opportunity for tax defaulters to regularise their tax status relating to previous periods. The objective she said is to increase the number of taxpayers in the tax net and raise revenue for the government.

She said “if we did not have oil, we would probably have had a better tax system today and a better level of compliance than we have. Our vision for Nigeria is to have oil plus economy, oil is only 10 per cent of our GDP, so if we did not have oil that 90 percent would be sustained by the economy, so is important we get level of tax compliance working.
“We have to as a people improve in terms of our level of tax compliance. Before oil came, this country was sustained on tax payment both in the South, East, West and North, in the north, it was cattle, cocoa proceeds drove education policies that transformed the south west, groundnut also. When oil came, tax became completely irrelevant.

“From an economic perspective, Nigeria deserves to be a prosperous nation, we have all the natural resources and human endowment to be a prosperous nation but we need to seat down and study what prosperous nations do to become prosperous. If you look at prosperous nations they have one thing in common, they have good tax compliance level in place. If you look at poor nations, they are reluctant in compliance.
“With technology, we now have capacity to drive tax compliance in a way that it has never been seen before, the British, America, everybody signed up to share information on beneficial ownership data, so to an extent there is really no where to hide anymore,” she said.
She said that the scheme is expected to increase Nigeria’s tax to GDP ratio from current six per cent to between 10 and 15 per cent, broaden the national tax base, curb tax evasion and discourage illicit financial flow.

“Most developing countries have tax to GDP ratios at 20 per cent, Nigeria still records a global low of six per cent. The federal ministry of finance, in a bid to address this, set up the VAIDS in collaboration with the 36 states of the federation.
“Tax payers who make full and honest declarations will enjoy waiver of interest and penalty, immunity from prosecution, confidentiality of information supplied, exemption from tax audits for the periods covered by the disclosure and flexible payment of tax due. Taxpayers who fail to participate in the scheme will be investigated and if found culpable will be subject to criminal prosecution,” she said.
Meanwhile, the scheme supported by an executive order commenced on July 1, 2017 to last for a period of nine months and will be implemented by the federal inland revenue in collaboration with all the 36 state Internal Revenue Service and the FCT IRS.

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