Taiwo Oyedele, Chairman of the Presidential Committee on Fiscal Policy and Tax Reforms, has disclosed that traders in Nigeria’s pure water (sachet water) business pay at least six to seven taxes daily. Oyedele shared this information during an interview with TVC’s Deji 360 on Monday.
Oyedele explained that these levies on pure water sellers, often referred to as ‘stickers’, are paid daily to their local government and other local agencies. He highlighted that the tax burden on informal sectors such as traders and artisans contributes to the rapid closure of these small businesses after establishment.
The committee head revealed that the committee is advocating to the National Assembly for the suspension of these levies, arguing that they stifle economic growth in the country.
“We have various data about the size and number of the formal sector which is really to be honest, you are talking about micro, nano, small businesses in the region of about 30 to 40 million. If you take the conservative number of 30 million, the approach we have adopted is to try and go after every single person in that bracket up to the people who are hawking pure water. The market trader association said to us that those who are selling pure water have to pay like 6 to 7 taxes every day. They call them stickers. You are going to ask yourself is there any country where they have been very successful with their tax system by chasing everyone? The answer is no. You can’t find anyone like that. You cannot become wealthy by taxing poverty,” Oyedele said.
**95% of Informal Sectors to be Exempted from Taxes**
Oyedele further stated that the committee’s proposal to the federal government includes a provision to exempt 95% of the informal sector from all forms of tax payment. He noted that this exemption would encourage economic growth and development, as their analysis showed that only 5% of the informal sector could afford the imposed taxes.
“We did our analysis and we concluded that the percentage of our informal sector that you actually tax who have the ability to pay is between 3 to 5%. On that basis, we believe that we can be able to get enough data and intelligence to identify the bottom 95% and then legitimately exempt them from all tax obligations whether it is the company’s income tax, PAYU or VAT and even withholding tax on whatever payment they need to make. The idea is we want to support the very important segment of our economy to be able to grow. They contribute a lot to our employment and our GDP, but they struggle. Many of them cannot survive 3 to 4 years so they set up those businesses then they go under. In large part, taxes are accountable for many of those reasons,” Oyedele added.
**What You Should Know**
Small businesses across Nigeria face the problem of multiple taxation from different government agencies at the federal, state, and local levels. Oyedele recently mentioned that the committee is recommending that state and local governments suspend “nuisance taxes” that do not add value to the state’s coffers.
While many of the committee’s proposals aim to support small businesses and the informal sector to drive economic growth, the implementation ultimately lies with the government.
