The Federal Government stated on Tuesday that the best actions to significantly reduce external borrowing and lower Nigeria’s huge debt burden remained the collection of additional taxes and the effective blockage of revenue leakages.
However, the government said that the debt load was within its capacity to manage.
The Director (Technical Services), Fatima Hayatu, spoke on behalf of the Minister of Finance, Budget, and National Planning, Zainab Ahmed, at a workshop on tax expenditure that the Economic Community of West African States Commission hosted in Abuja.
This was as part of the implementation of the support program for tax transition in West Africa.
The purpose of the meeting was to review guidelines for harmonizing tax spending management procedures as well as for monitoring and assessing the tax transition in ECOWAS member nations.
The Minister stated that the government was very concerned about the problem of tax expenditure.
The government had stated in July that the nation’s debt service costs for the first quarter (Q1) of 2022 would be N1.94 trillion, which is N310 billion more than the actual revenue received during that time.
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This indicates that Nigeria’s debt service costs currently exceed its revenue.
Ahmed said, “If we have more taxes and redirect the taxes to the right fiscal sectors of our economy, we will reduce our debt burden. It is not as if the debt is beyond what the government can handle. If you look at the ratio of the debt to the Gross Domestic Product, I think the government is doing well.
“The debt is not something that cannot surmounted. The programme is to block leakages where the taxes are being diverted. So if we block leakages, and if it is transparent, Nigeria will borrow less and we will have more money to finance other sectors.”
While stating that tax expenditure management reforms were gaining traction in Nigeria, she pointed out that this development had led to ongoing in-house capability development and internal agency restructuring for increased efficiency.
Ahmed added that the government would start the process of rationalizing tax exemptions by eliminating outdated pioneers and other tax breaks for established businesses.
She claimed that, in contrast to previous results, the nation was benefiting from tax breaks and other incentives provided to small enterprises.
She said, “A lot has changed, the system is more transparent and tax expenditure that government has given which is tax for bond is to encourage ailing and infant industries to be able to do more and employ more youth.
“I am glad to say that the tax expenditure that federal government has been given has encouraged industries and manufacturers to stay afloat even with the COVID-19 pandemic and also to say that they have been able to keep their staff. That, to us, is an achievement because we don’t want people to loose their jobs which would reduce the insecurity we are facing.”
Source: Ripples Nigeria