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Economy: How Nigeria loses N6trn to ‘enormous tax waivers’ annually ─Oyedele, Tax & Fiscal Reforms Chair

Taiwo Oyedele, Chairman of Presidential Committee, Tax and Fiscal Policy Reforms

*Taiwo Oyedele, Chairman of Presidential Committee, Tax and Fiscal Policy Reforms, expresses concern over implications of Nigeria’s incurring losses through ‘enormous tax waivers’, affirming ‘we are giving away about N6 trillion annually’, as he assures the Committee is currently interrogating these incentives individually

Isola Moses | ConsumerConnect

For the country’s apparent failure to measure their impact on the economy over the years, Mr. Taiwo Oyedele, Chairman of the Presidential Committee, Tax and Fiscal Policy Reforms, has expressed concern over the implications of Nigeria’s incurring annual losses of about N6 trillion in tax waivers vis-a-vis the same amount it generates in revenue.

ConsumerConnect reports Oyedele, a financial expert who stated this while featuring in a Channels TV programme monitored Friday, November 24, 2023, in Lagos, confirmed the Nigerian Senate quoted the figure recently as tax waivers.

Photo collage: FRCN

“Yes, as a matter of fact, we are giving away about N6 trillion annually,” he asserted.

On the economic viability of the enormous tax waivers, Oyedele acknowledged the fact that West African country had failed to measure the impact of these losses on the Nigerian economy.

He also explained: “This is really the part that makes it painful because it would then appear like you just wasted the money you didn’t even have in the first place, and those numbers are huge compared to our revenue base.

“If we were a country where we’re making N60, N70 trillion and we gave away, maybe we would say, ‘We can live with it.’

“But the revenue generated by the FIRS in 2021 — the year before the last — was just barely N6 trillion. And then you give that away in tax waivers and incentives.”

He, however, noted the importance of exemptions from Value-Added Tax (VAT) on essentials, including basic food items and medical expenses in the country’s economy.

Oyedele stated: “I’ve requested that government suspend VAT on diesel for very obvious reasons as well as suspend VAT on import duties [and] CNG.

“There are things you have to do per time because at the end of the day, governance is about the people.

“You may not be able to immediately measure the economic impact on those ones, but you, of course, can tell the social impact.”

The Chairman of the Presidential Committee, Tax and Fiscal Policy Reforms, however, said without such interventions, the country would “go up in flames.”

According to him, people could find themselves on the streets if they find life “completely impossible” and they believe that government is being insensitive.

Oyedele as well noted: “The other waivers, whether those waivers are to do with income tax exemptions, duty and VAT waivers for some businesses, even the Free Trade Zone Area, where people can operate physically within Nigeria but, by law, we would assume that they are not within Nigeria and then, they get all manner of waivers from duties to VAT and income tax.”

He said that the Presidential Committee, Tax and Fiscal Policy Reforms considers this an important area of focus, and is going through these incentives individually, interrogating them.

The Chairman of the Committee on Tax and Policy Reforms stated: “If we were going to design a new incentive regime for Nigeria today, will this qualify? On what basis? How can you ensure that it’s targeted? How can you measure the impact on the economy?”

Oyedele, nonetheless, said much as possible, the Presidential Committee is building “sunset provisions” into those incentives, as one might find that a policy that is beneficial to the country’s economic circumstances in 2023 could be irrelevant in two years’ or less time.

He submitted: “But it could also be maybe another five or 10 years. But whatever it is, we will be using data and engagement with stakeholders to decide and design.

“How long do we need the incentive for? and put those subset clauses in the law, so that it wouldn’t be another 20 years before we realise that we’ve been losing money for so many years in the past, as we have seen historically.”

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