Nigerian President Umaru Musa Yar’Adua called for state and local governments to diversify their revenue sources as the price of oil, which is heavily linked to state funding, continues to plummet on the world's markets.
In a speech prepared for the opening of a two-day international tax conference organised by the Joint Tax Board (JTB), the president noted that the volatility of the price of a barrel of oil, which has fallen from a high of USD147 earlier in the year to USD64 per barrel this week, has forced the push for reform as local governments depend heavily on revenues generated from its sale.
Yar’Adua called for revisions in Nigeria's policy in order to overcome the country's current dependence on monthly income supplied by the Federation Accounts Allocation Committee. More stable, sustainable sources of tax revenue are needed to fund government, he went on to argue. Crude oil currently contributes to 85% of the nation’s earnings – recent fluctuations therefore have caused massive changes to projected budgets.
Speaking at the occasion, the president said, "this is crucial in view of the fact that the diversification away from dependence on oil as the principal source of revenue must apply to the three tiers of government. Thus, the states and local governments should henceforth depend less on the monthly FAAC allocations."
Organiser of the conference and chairman of the JTB, Ifueko Omoigui-Okau, explained that the conference was held to create a forum where tax officials and major stakeholders could meet to discuss and develop improvements to the Nigerian tax system. She stressed the importance of learning from other jurisdictions that primarily use taxation to fund the national economy. She described it as a chance for participants, tax practitioners and experts to share experiences and develop ideas and improve taxpayers’ knowledge of tax practices.
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