The Federal Government stated on Tuesday that the collection of additional taxes and the effective blockage of revenue leakages remained the best actions to significantly reduce external borrowing and lower Nigeria’s massive debt burden.
The government, on the other hand, claimed that the debt load was manageable.
Fatima Hayatu, Director (Technical Services), spoke on behalf of Zainab Ahmed, Minister of Finance, Budget, and National Planning, at a workshop on tax expenditure hosted by the Economic Community of West African States Commission in Abuja.
This was done as part of the implementation of the West African tax transition support program.
The meeting’s goal was to go over guidelines for harmonizing tax spending management procedures, as well as to monitor and assess the tax transition in ECOWAS member countries.
According to the Minister, the government is very concerned about the issue of tax expenditure.
The government announced in July that the nation’s debt service costs for the first quarter (Q1) of 2022 would be N1.94 trillion, N310 billion more than the actual revenue received during that time period.
This means that Nigeria’s debt service costs are currently greater than its revenue.
“We will reduce our debt burden if we have more taxes and redirect them to the right fiscal sectors of our economy,” Ahmed said. It’s not as if the debt is unmanageable for the government. If you look at the debt-to-GDP ratio, I believe the government is doing well.
“The debt is something that can be overcome.” The program’s goal is to stop leaks where taxes are being diverted. So, if we can stop the leaks and make it more transparent, Nigeria will borrow less and have more money to finance other sectors.”
She stated that tax expenditure management reforms were gaining traction in Nigeria, and that this had resulted in ongoing in-house capability development and internal agency restructuring for increased efficiency.
Ahmed went on to say that the government would begin the process of rationalizing tax breaks by eliminating outdated pioneers and other tax breaks for established businesses.
In contrast to previous results, she claimed that the nation was benefiting from tax breaks and other incentives provided to small businesses.
“A lot has changed, the system is more transparent, and the government’s tax expenditure, which is tax for bond, is to encourage ailing and infant industries to do more and employ more youth,” she said.
“I am pleased to report that the federal government’s tax expenditure has encouraged industries and manufacturers to stay afloat despite the COVID-19 pandemic, as well as to report that they have been able to retain their staff.” That is an accomplishment in our opinion because we do not want people to lose their jobs, which would reduce the insecurity we are experiencing.”