The Senate Finance Committee has voted against a N6 trillion tax and duty waiver in the proposed budget for 2023.
The committee made the announcement on Tuesday during a panel meeting in Abuja with Zainab Ahmed, minister of finance, budget, and national planning, and heads of revenue-generating agencies.
The meeting went over the proposed medium-term expenditure framework and fiscal strategy paper (MTEF/FSP) for 2023-2025.
The minister informed the committee that the proposed 2023 budget of ₦19.76 trillion would have a deficit of ₦12.43 trillion because ₦6 trillion was projected as tax and import duty waivers, while fuel subsidies would take ₦6 trillion.
The budget proposals were rejected by the committee’s chairman, Solomon Adeola.
Before submitting the proposals to the National Assembly for consideration and approval, Adeola said the projected ₦12.43 trillion budget deficit and the N6 trillion tax and import duty waivers should be adjusted.
He also urged the minister to investigate the list of beneficiaries of the waivers for the required downward revision to ₦3 trillion in order to allow for a reduction in the ₦12.43 trillion deficit figure.
According to him, relevant authorities should prioritize the issue of waivers, noting that Nigeria cannot afford waste and leakage.
“The proposed ₦12.43 trillion deficit for the 2023 budget and ₦6 trillion waivers are very disturbing, and must be critically reviewed,” he said.
“Many of the beneficiaries of the waivers are not ploughing accrued gains made into expected projects as far as infrastructural developments are concerned.
“The same goes for tax credit window offered by the FIRS to some companies.
“Billions and trillions of naira can be generated by the government as revenue if such windows are closed against beneficiaries abusing them and invariably provide required money for budget funding with less deficit and borrowings.
“The NCS should help in this direction by critically reviewing waivers being granted on import duties for some importers just as the FIRS should also review the tax credit window offered some companies without corresponding corporate social services to Nigerians in terms of expected project executions like road construction.
“We cannot accommodate this ₦6 trillion tax waivers.
“It is in this way that the committee frowns at the projected ₦12.41 trillion budget deficit contained in the 2023-2025 MTEF/FSP and the alarming projection of ‘no provision for treasury-funded MDAs’ capital projects in 2023.
“This scenario is unacceptable, and we must find ways to drastically reduce the deficit.
“It is apparent that the borrowing trends cannot be allowed to continue unchecked and conscious efforts must be made to reduce budget deficits.
“Achieving these goals requires us to look inwards towards increased revenue generation, blocking of leakages and restraints on what are generally frivolous expenditures by MDAs, particularly the Government Owned Enterprises (GEOs).
“Our preliminary findings and directives to some of the agencies had led to the payment of millions of naira into CRF in accordance with the fiscal responsibility Act 2007 and the 1999 Constitution.
“It is needless to say that these millions not paid to CRF contribute to the yearly huge budget deficits of the federal government.
“The investigation was also able to get some agencies to accept opting out of the federal budget altogether based on their internal revenue generating ability.
“Some of these findings are relevant to the proceedings of this 5-day interactive session.
“From the challenges thrown up against our economy in terms of the Russia-Ukraine war, the impact of crude oil theft, insecurity, and continuing infrastructure deficits, it is time for all to agree that it cannot be business as usual for government revenue and expenditures.
“We need to block all revenue leakages and misuse in Ministries, Departments and Agencies (MDAs) as well as control expenditure to free funds for needed infrastructure development and provision of social services.”
The committee also directed the Nigeria Customs Service (NCS) to conduct a 50% reduction in the proposed waivers in the fiscal document.
It also stated that the Federal Inland Revenue Service (FIRS) should conduct a thorough investigation into some companies’ abuse of tax credits.
Ahmed, on the other hand, stated that the budget deficit is a result of debt servicing, and that tax credits are issued when companies build projects that are certified and issued certificates by the federal ministry of works.
Muhammad Nami, FIRS chairman, told the committee that tax credit was an important government innovation that had yielded positive results since September 2019, when President Muhammadu Buhari introduced it through Executive Order 007.
He urged the committee not to move in the direction of scrapping, stating that it is only granted to companies that have evidence of completed projects.
Hammad Ali, NCS comptroller-general, assured the committee that revenue generation would improve in the fiscal year 2023.
