The Minister of Finance, Budget and National Planning, Zainab Ahmed on Tuesday insisted that only the collection of more taxes and effective blocking of revenue leakages were realistic measures that would drastically cut borrowings and reduce the nation’s high debt burden.
Ahmed stated this at a workshop on tax expenditure organised by the ECOWAS Commission under the Context of the Implementation of the Support Programme for Tax Transition in West Africa (PATF) in Abuja.
The workshop is aimed at examining directives on harmonisation of tax expenditure management practices and the monitoring and evaluation of tax transition in ECOWAS member states.
The minister, represented by the Director, Technical Services in the Ministry, Fatima Hayatu, said the issue of tax expenditure was a great concern for the government.
Recall that the government had in July revealed that 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 presently 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 government can handle. If you look at the ratio of the debt to the Gross Domestic Product (GDP), I think the government is doing well.
“The debt is not something that cannot be surmounted. The programme today 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”.
Noting that reforms in tax expenditure management were gaining traction in Nigeria, the minister observed that the development had resulted in the continuous development of in-house capabilities and internal restructuring in agencies for greater efficiency.
Ahmed also disclosed that government would commence the rationalisation of tax exemptions by phasing out antiquated pioneers and other tax incentives for matured industries.
The minister noted that contrary to what was obtained in the past, the country is now reaping the benefits of tax exemptions and concessions given to small businesses.
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 be able to do more and employ more youth.
“I am glad to say that the tax expenditure that federal government has been given has encouraged industries and manufacturers to stay afloat even with the COVID-19 pandemic and also to say that they have been able to keep their staff.
That to us is an achievement because we don’t want people to loose their jobs which would reduce the insecurity we are facing.
According to her, Nigeria was committed to strengthening transparency in its public financial management towards the drive to boost domestic resource mobilisation.