NewsSenate Rejects N12.43trn Deficit, N6trn Tax, Import Duties Waivers In 2023 Budget

Senate Rejects N12.43trn Deficit, N6trn Tax, Import Duties Waivers In 2023 Budget


September 14, (THEWILL) – The Senate has rejected the 2023-2025 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP), which proposed a N6 trillion tax and import duties waivers in the N19.76 trillion 2023 budget, which also contained a deficit of N12.4 trillion.

The lawmakers, however, directed the Nigeria Customs Service (NCS) to carry out a downward review of the proposed waivers by 50 percent and also tasked the Federal Inland Revenue Service (FIRS), to critically look into the seeming abuse of tax credit by some companies.

Chairman of the Senate Committee on Finance, Senator Solomon Olamilekan Adeola (APC Lagos West), expressed this dissatisfaction at the opening of a five-day interactive session with heads of revenue generating agencies on the 2023-2025 Medium Term Expenditure Framework and Fiscal Strategy Papers on Tuesday, in Abuja.

Minister of Finance, Budget and National Planning, Zainab Ahmed, in her opening remarks, informed the committee that the N19.76 trillion proposed as the 2023 budget would have a deficit of N12.43 trillion because N6 trillion had been projected as tax and import duty waivers, while fuel subsidy would gulp a whooping N6 trillion.

Obviously uncomfortable with the Minister’s submissions, the Chairman of the Senate panel, Senator Adeola, told her that both the projected N12.43 trillion budget deficit and the N6 trillion tax and import duty waivers should be critically reviewed downward before sending the proposals to the National Assembly for consideration and approval.

He also told the minister to look into the list of beneficiaries of the waivers for required downward review to N3 trillion, in order to give room for the reduction of the N12.43 trillion deficit figure.

Adeola said, “The proposed N12.43 trillion deficit for the 2023 budget and N6 trillion waivers are very disturbing and must be critically reviewed.

“Many of the beneficiaries of the waivers are not ploughing accrued gains made into expected projects as far as infrastructural developments are concerned.

“The same goes for the tax credit window offered by the FIRS to some companies.

“Billions and trillions of naira can be generated by the government as revenue if such windows are closed against beneficiaries abusing them and invariably provide required money for budget funding with less deficit and borrowings.

“The NCS should help in this direction by critically reviewing waivers being granted on import duties for some importers just as the FIRS should also review the tax credit window offered to some companies without corresponding corporate social services to Nigerians in terms of expected project executions like road construction.”

According to him, the issue of waivers should be taken strongly by relevant authorities because Nigeria does not have the capacity for now.

“We cannot accommodate this N6 trillion tax waivers. It is in this wise that the committee frowns at the projected N12.41 trillion budget deficit contained in the 2023-2025 MTEF/FSP and the alarming projection of ‘no provision for treasury-funded MDAs’ capital projects in 2023.

“This scenario is unacceptable and we must find ways to drastically reduce the humongous deficit figure.

“It is apparent that the borrowing trends cannot be allowed to continue unchecked and conscious efforts must be made to reduce budget deficits.

“Achieving these goals requires us to look inwards towards increased revenue generation, blocking of leakages and restraints on what are generally frivolous expenditures by MDAs, particularly the Government Owned Enterprises (GEOs).

“Our preliminary findings and directives to some of the agencies had led to the payment of millions of naira into CRF in accordance with the Fiscal Responsibility Act 2007 and the 1999 Constitution.

“It is needless to say that these millions not paid to CRF contribute to the yearly huge budget deficits of the federal government.

“The investigation was also able to get some agencies to accept opting out of the federal budget altogether based on their internal revenue generating ability. Some of these findings are relevant to the proceedings of this 5-day interactive session.

“From the challenges thrown up against our economy in terms of the Russia-Ukraine war, the impact of crude oil theft, insecurity, and continuing infrastructure deficits, it is time for all to agree that it cannot be business as usual for government revenue and expenditures.

“We need to block all revenue leakages and misuse in MDAs, as well as control expenditure to free funds for needed infrastructure development and provision of social services.”

However, the Minister of Finance explained that the exchange rate differential from N410- to N415/$ was projected in the fiscal document.

“On subsidy, our assumption is that we could exit by June in 2023, so that we don’t leave a burden for the next government and we do know that exiting has an immediate impact on the citizens, but we hope that the parliament would see a better way we can exit.

“On the issue of the budget deficit, we are concerned that debt serving is consuming a huge revenue and hence we need to improve our revenue and reduce leakages inherent in our system.

“One of the ways to increase our revenue is to strengthen our monetary generating enterprises and to provide real sanctions to defaulters based on the fiscal responsibility act.

“On the issue of issuing tax credit to companies: Tax credits are issued only when companies construct projects and the projects are certified and issued a certificate by the Federal Ministry of Works.

“Government only announced the companies that expressed interest to construct some roads and Mr President has given them the go-ahead to embark on the process. The procedure is that they need to negotiate the bill of quantities and the design of the project with the Federal Ministry of Works”, she said.

On his part, Chairman of the Federal Inland Revenue Service, Muhammad Mamman Nami, told the committee that tax credit was an important innovation of government which according to him had yielded positive results from September 2019 when it was introduced through Executive Order 007 by President Muhammadu Buhari.

Nami urged the committee not to move in the direction of scrapping, saying it is only given to companies with evidence of projects executed.

He informed the committee that out of the N6.08 trillion projected revenue from January to July 2022, the FIRS generated N5.59 trillion and assured that the N10.4 trillion projected for the year would be achieved.

Also, the Comptroller–General of Customs, Col Hammed Ali (Rtd), assured the committee of an improved revenue generation in the 2023 fiscal year.

On Telecommunications Tax, Ali said, “it is only in Nigeria that citizens do not pay telecommunications in the world”, while calling for the implementation of Telecommunications Tax in 2023.

The interface continues today with the Governor of the Central Bank, Godwin Emefiele and Group Managing Director of Nigerian National Petroleum Company Limited (NNPCL), Mele Kyari, expected to appear before the Committee.

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