Tax Reform Insufficient To Achieve 18% GDP Target – LCCI

The Lagos Chamber of Commerce and Industry (LCCI) has stated that while the Federal Government’s proposed Tax Reform Bill is a step in the right direction, it remains inadequate on its own to achieve the ambitious 18 per cent tax-to-GDP ratio target outlined in the 2025 budget.

This was part of the highlight of the Chamber’s quarterly economic review and advocacy engagement with the business community and policymakers.

Speaking on addressing critical business environment issues in Nigeria, the President of LCCI, Mr Gabriel Idahosa, emphasised that the proposed reforms, though necessary, must be part of a broader and more strategic fiscal overhaul to make a significant impact on revenue generation, economic growth, and macroeconomic stability.

According to the Chamber, Nigeria’s tax-to-GDP ratio stood at 7.9 per cent in 2022, significantly trailing the African average of 16.0 per cent.

This substantial gap underscores the urgency for a more efficient and inclusive tax system that balances revenue goals with economic competitiveness and ease of doing business.

LCCI stressed that any meaningful improvement must be complemented by efficient tax administration, increased compliance, reduction in multiplicity of taxes, and the expansion of the tax base through inclusive policies.

Beyond taxation, the LCCI raised the alarm over Nigeria’s deepening food insecurity and persistent inflationary pressure, which it says continues to strain millions of households.

Although there have been marginal improvements in certain areas, food prices remain prohibitively high, largely due to factors such as currency devaluation, the removal of fuel subsidies, and broader macroeconomic instability.

“Economic hardship has made even basic food items unaffordable for many Nigerians. Inflation is eroding purchasing power and worsening food insufficiency,” Idahosa said.

He called for immediate and coordinated intervention by federal and state governments to address the root causes of food inflation and to proactively manage the looming threat of nationwide flooding, which could further disrupt food supply and damage critical infrastructure.

On the real estate front, the Chamber highlighted the sector’s struggle with escalating construction costs, forex volatility, bureaucratic bottlenecks, and excessive land-related fees, particularly in Lagos and other high-demand states.

Developers, the LCCI noted, are further burdened by unofficial “soft costs” and rising approval expenses, which inflate project budgets and deter investment.

While the push for monthly or quarterly rental payments may relieve tenants, the Chamber warned that without parallel support for landlords and investors, such policies could prove counterproductive.

According to the Chamber, Micro, Small, and Medium Enterprises (MSMEs), which form the backbone of the Nigerian economy, are also facing intense operational difficulties.

These include widespread insecurity, erratic power supply, high electricity tariffs, and unresolved issues around metering.

The Chamber added that numerous small businesses have been forced to shut down or reduce their workforce due to rising input and energy costs.

“MSMEs are struggling to survive under current conditions,” Idahosa said. “We urge the government to offer targeted electricity subsidies, enforce proper refund mechanisms for meter-related payments, and clarify energy billing frameworks to protect small businesses.”

Tax Reform Insufficient To Achieve 18% GDP Target – LCCI is first published on The Whistler Newspaper