Taxation of Informal Sector will Address Budget Deficit, Says FIRS
The Executive Chairman of the Federal Inland Revenue Service , Mr. Muhammad Nami, yesterday said Nigeria and the rest of Africa must exploit the potential in the informal sector of the economy to reduce budget deficits and increase tax revenue collection.
The FIRS boss, who doubles as ATAF Council chairman, stated that despite its large size, the sector remained one of the most difficult sectors to tax, as most of the businesses conceal their activities from the tax authorities. Nonetheless, he argued that informal businesses that contribute to tax revenues are likely to assert their rights to receive certain services from the government, thereby ensuring national development and accountability.
He said integrating businesses in the informal segment into the tax net will instill a tax- paying culture in the businesses, thereby ensuring tax compliance when the businesses expand, adding that taxing the sector had become critical as it will promote a perception of fairness in the tax system. According to him, it is therefore necessary to reduce and eventually eliminate the deficits if the continent must meet its development needs, stressing that the informal sector in Africa constitutes between 21 per cent and 70 per cent of the GDP their GDP and account for between 30 per cent and 90 per cent of employment in the region.
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