These are indeed hard times for Nigeria. The lackadaisical political ambience has been well indicated by the ravaging cases of a nationwide insecurity and a regressing economic situation. The country is overtly on the brink of being broke and one of the clearest indicators of this crisis is the country’s growing debt profile. The Centre for the Promotion of Private Enterprise recently raised concerns about this situation, noting that the country’s national debt alone could soon hit the N50 trillion mark. CPPE, in its first quarters economic review also reported that the growing debt profile of the country raised imminent sustainability risks.
Zainab Ahmed, the Minister of Finance, Budget and National Planning in procuring a solution to the debt crisis, has insisted that the collection of more taxes and effectively blocking revenue leakages were feasible measures to cut down borrowing drastically and reduce the country’s debt burden. This was noted at a workshop on tax expenditures which was organized by the ECOWAS Commission under the context of Implementation of the Support Program for Tax Transition in West Africa held in Abuja. This workshop is proposed to examine measures on the harmonization of tax expenditure management practices, as well as monitoring and evaluating tax transition in ECOWAS member states.
Tax expenditure issue remains a major concern for the government.
Represented by the Director of Technical Services in the Ministry, Fatima Hayatu, the Minister stated that the recurrent problems of tax expenditures have been of immense concern to the government. In fact, the government in July, disclosed that the country’s debt service cost in the first quarter of the year was at N1.9 trillion, which was N310 billion more than the revenue received as of this period and an indication of the debt service significantly outweighing the country’s revenue.
The finance minister however stated that the debt burden could be contained by the government. She noted that by accruing more taxes and redirecting these taxes to the needed fiscal sectors of the economy, it would possibly be easier to reduce the debt burden. She however commended the government on the evaluation of the gross domestic products (GDP) rate. She also pointed out that the program was a means to procure measures to block leakages which of transparent, will help Nigeria borrow less and with enough funds to finance other sectors.
Government to commence rationalization of tax exemptions.
Upon observation of the traction that reforms in tax expenditures have been making in Nigeria, the minister noted that this development was as a result of the in-house capacities and internal restructuring in agencies to ensure a better efficiency. She also iterated the government’s plan to commence rationalization of tax exemptions by gradually phasing out antiquated pioneers and other incentives for developed industries. She noted that contrary to what was previously obtained, immense benefits were now being achieved from tax exemptions and the concessions offered to small businesses.
Explaining further, Zainab Ahmed pointed out that immense changes have occurred since the system became more transparent and the given tax expenditure by the government will improve growing industries and help create more jobs. She also noted that this tax expenditure initiated by the federal government helped many businesses stay afloat even during the Covid-19 pandemic and to keep their staff. She said that this was a huge achievement, as these lost jobs could have increased the dilemma of insecurity currently ravaging the country.
ECOWAS member-states urged to mobilize taxes to offset revenue decline.
However, the minister indicated Nigeria’s commitment to improving the transparency in its public financial management toward enhancing the mobilization of domestic resources. Cecile Tassin-Pelzer, the head of cooperation, European Union for Nigeria and ECOWAS complained about the low tax to GDP ratio in West Africa. Observing domestic revenue as a major source of government’s expenditure funding and the challenges of revenue mobilization, she urged the member states of ECOWAS to further mobilize more taxes so as to offset the imminent revenue decline.
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