The nation’s huge debt load can only be reduced, according to Mrs. Zainab Ahmed, Minister of Finance, Budget, and National Planning, if more taxes are collected and income leaks are effectively stopped.
This was said by the minister during a workshop on tax spending that was held in Abuja by the ECOWAS Commission as part of the rollout of the PATF (Support Programme for Tax Transition in West Africa).
The goal of the workshop is to examine guidelines for harmonizing tax spending management procedures as well as for monitoring and assessing the tax transition in ECOWAS member nations.
The Director of Technical Services at the Ministry, Fatima Hayatu, spoke on behalf of Ahmed and stated that the government was extremely concerned about the problem of tax expenditure.
It would recall that 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 outweighs its revenue.
Ahmed, however, said the debt burden is not beyond what the government can handle.
She 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 goverment can handle. If you look at the ratio of the debt to the Gross Domestic Product (GDP), I think the goverment 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”.
The minister said that tax expenditure management reforms were taking off in Nigeria and that these developments had led to ongoing internal agency reorganization for improved efficiency as well as the continued development of in-house competencies.
Ahmed said that the government will start the process of rationalizing tax exemptions by eliminating outdated pioneers and other tax breaks for established businesses.
The minister pointed out that, in contrast to previous results, the nation is benefiting from tax breaks and other incentives provided to small enterprises.
She explained: “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 do more and employ more youths.’’
