Finance

FG pays $12bn, N2.3trn inherited debts, says to increase tax base not rates

December 25, 2018905 views0 comments

The Nigerian government said it has settled no less than $12.2 billion and
N2.3 trillion inherited debts and liabilities handed over to the current
administration within the last three years.
Among these debts and liabilities include $5.4 billion Paris club over
deductions refunded to sub-nationals; $6.8 billion for Joint Venture (JV)
Cash Call; N1.9 trillion payments to Contractors and exporters under the
Export Expansion Grant (EEG) as well as N488 billion refund to
sub-nationals for federal government roads constructed by them.
Zainab Ahmed Minister of Finance confirmed the release at a news
conference on the state of the economy on Monday in Abuja.
Ahmed also clarified that the government has no plans to increase tax
rates but was planning to expand its tax base in order to generate more
revenues to fund its operations. However, the planned increase in luxury
taxes, which though approved, has not yet being implemented will be
implemented from next year.
Present at the briefing were Patience Oniha, director-general, Debt
Management Office;  Mary Uduk, acting director-general, Securities and
Exchange Commission, and Hameed Alli, the Comptroller General of Customs
and Babatunde Fowler, executive chairman, Federal Inland Revenue Service
Others were Mahmoud Dutse, the permanent secretary, Ministry of Finance
and other top officials in the ministry
She said that the Paris Club Refund was released to states in phases based
on some conditions, which included that salaries and staff related arrears
must be paid as a priority.
Also, there must be commitment by all states to the commencement of the
repayment of Budget Support Loans granted in 2016 and clearing of amounts
due to the Presidential Fertiliser Initiative.
Similarly, she said that as part of the Federal Government’s efforts to
ensure all pensioners get their entitlements, the ministry had released
N54 billion to settle outstanding pension arrears in 2014, 2015 and 2016.
She noted that the government had settled pension claims up to March 2017.
Ahmed announced that the federal government had agreed to pay about N571
million as gratuity to 175 retired police officers affected by the Biafra
war.
In the area of expenditure performance, the finance minister said that in
2018, despite the revenue shortfall, the federal government had been able
to pay salaries and fully service its debt obligations.
She said as at Dec. 21, 2019, the ministry had released overhead funding
for seven months, while N995 billion had been released for capital
projects.
She expressed optimism that the ministry would perform better during the
rest of the budget year by driving up revenue generation to improve the
fiscal space for spending.
To increase revenue, she said the federal government would be implementing
more public financial management reforms.
“We will improve collaboration between our revenue collection agencies,
including the Nigeria Customs Service, Federal Inland Revenue Service and
other trade partners, to share information and intelligence that will help
improves revenue and makes collections more efficient.
“Under my tenure as the Finance Minister, I intend to continue championing
such digitalization transformation initiatives that have proven to be a
good way forward for our revenue generation drive,” she said.
When asked some of the taxes that would be affected by the planned
increase in tax base, the minister said that the government would from
next year begin the implementation of taxes on luxury items.
She said: “We are exploring the way to increase taxes as well as reduce
taxes in some sectors.
“For Small and Medium Enterprises, what will happen is to reduce taxes.
But there are some special taxes that we will be looking at imposing.
“For example, luxury taxes. If you have a private jet, we will be taxing
you especially for that. If you have a yacht, we will be charging you for
that and also in terms of excise duties there are also some new areas
where excise duties will be introduced.
“We haven’t got all the approvals but one of the major areas might be that
of carbonated drinks produced in the country,” she said.
Ahmed also said that the government had also recorded an increase in the
number of registered tax payers from 10 million in 2015 to about 19
million in 2018 under the Joint Tax Board.
On the whistle blower policy, Ahmed said that the Federal Government had
recovered over N8.5 billion and 465 million dollars, among others, from
1,051 investigations conducted from tip offs received.
She also said that through the Voluntary Assets and Income Declaration
Scheme, over N35 billion was recovered while significant increase was also
recorded in the country’s tax base.
In the area of fiscal collaboration with state governments, the finance
minister said that the federal government had provided budget support to
states with a release of N1.9 trillion.
This, she noted, was to enable the state governments meet their salary and
pension obligations, especially in the face of dwindling oil revenues over
the last two years.
Earlier, Fowler, who also spoke at the briefing, said that out of the
2,000 property of corporate entities identified early this year that were
not paying taxes, 561 of them had come forward to make payments.
He said 116 companies claimed not to own any of these properties, adding
that 30 of them had actually written to the FIRS that the property in
question do not belong to them.
Fowler said based on the law, the property would be taken over by the
government.
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