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The World Bank has urged Nigeria to increase health-related taxes and gradually raise the Value Added Tax (VAT) rate in line with the Economic Community of West African States (ECOWAS).
The recommendation was contained in the Bank’s latest Nigeria Development Update (NDU) report released on Wednesday, which assessed the country’s economic performance and reform progress.
According to the World Bank, Nigeria has made progress through recent reforms such as the removal of petrol subsidies and the unification of foreign exchange (FX) rates.
The bank warned that the benefits of these measures could fade without stronger fiscal discipline, improved transparency, and enhanced revenue generation.
The Bank also called for the adoption of modern property tax frameworks at the state and local levels to expand the tax base and strengthen subnational revenue capacity.
“Adopt modern property tax frameworks at the subnational level,” the report reads.
“Increase health taxes and gradually increase the VAT rate in line with ECOWAS. Increase fiscal governance, clear the backlog of FGN audits for 2022–2024.”
The World Bank also advised the government to cut non-essential government spending, including vehicle purchases and trainings, and adopt realistic budget assumptions to ensure fiscal stability.
It urged the federal government to clear the backlog of audits for 2022 to 2024 and improve fiscal governance at all levels.
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