Tax revenues have been of great importance to many governments of the world, especially in developed countries compared to developing countries like ours in Nigeria. Before the return to democracy in Nigeria, tax revenues had not been a significant contributor to the Government revenues, and minimal attention had been paid to it. The shift to take to critical consideration to increasing tax revenues in Nigeria became more interesting in the 4th Republic from 1999. Still, the concentration has not reached this height until the oil revenues accruable to the Nigerian Government started to dwindle in the last decade, and most especially in the current administration. Even with the recent development, the Nigerian statistics regarding the ratio of tax revenues to Gross Domestic Products (GDP) has not exceeded 6%, far-fetched from the global and African averages. Nigeria as a country ranks in the lowest quartile within African.
The OECD average was about 34.3% in 2018, while the highest ratio in Africa is by Seychelles (32.4%). Nigeria’s tax-to-GDP ratio in 2018 (6.3%) was lower than the average of the 30 African countries in Revenue Statistics in Africa 2020 (16.5%) by 10.2 percentage points and lower than the Latin America and the Caribbean (23.1%).
Though the personal income tax is the highest tax contribution head across the Globe, followed by property taxes and the likes, but the global practice is shifting towards more indirect taxes such as the consumptions or sales taxes (i.e., VAT and GST), property taxes, as indirect taxes are easy to administer, collect and the follow of the revenues is consistent and matches the timing to which Government requires such for meeting up with its social contract with their citizenry.