Economy

How more taxes’ll reduce debt load – FG

The Federal Government said the collection of more taxes and is diversion to the right fiscal sectors of the economy will help curtail excessive external borrowing and lessen the high debt burden in Nigeria.

According to The Punch, the Minister of Finance, Budget and National Planning, Zainab Ahmed, said this at a tax expenditure workshop organized by the Economic Community of West African States Commission.

The Minister was represented at the tax workshop which is under the context of the Implementation of the Support Programme for Tax Transition in West Africa in Abuja by the Director (Technical Services), Fatima Hayatu.

However, the federal government said the debt burden was not beyond what it could effectively handle when compared in ratio to the Gross Domestic Profit.

The event was also aimed at examining directives on the harmonisation of tax expenditure management practices and the monitoring and evaluation of tax transition in ECOWAS member-states.

The government had in July said the country’s debt service cost in the first quarter (Q1) 2022 was N1.94 trillion, N310 billion higher than the actual revenue received during the period indicating that Nigeria’s debt service cost presently outweighs 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 be 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 informing that reforms in tax expenditure management were gaining traction in Nigeria, she observed that the development had resulted in the continuous development of in-house capabilities and internal restructuring in agencies for greater efficiency.

Ahmed also said that government would commence the rationalization of tax exemptions by phasing out antiquated pioneers and other tax incentives for matured industries.

According to her, contrary to what was obtained in the past, the country is presently reaping the benefits of tax exemptions and concessions given to small businesses.

She said, “A lot has changed, the system is more transparent and tax expenditure that the 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 the 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 lose their jobs which would reduce the insecurity we are facing.”

Ahmed said Nigeria was committed to strengthening transparency in its public financial management towards the drive to boost domestic resource mobilisation.

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