N3.8tr Budget Deficit Slows Current, Capital Expenditure

President Muhammadu Buhari signing 2018 Budget into law at the State House Abuja Wednesday. The president is flanked by the Vice President Yemi Osinbajo; Chairman Senate Committee on Appropriation, Senator Danjuma Goje; Chairman House Committee on Appropriation, Hon Mustapha Bala; SSAP on National Assembly Matters (House), Hon Suleiman Kawu; and SSAP on National Assembly Matters (Senate), Sen Ita Enang.
  • N3.8tr Budget Deficit Slows Current, Capital Expenditure

The Fiscal Policy Roundtable Co-Chair Doyin Salami has linked government’s inability to meet recurrent and capital expenditures to N3.8 billion budget defict and debt profile of N22.7 trillion.

Salami, who was represented by Taiwo Oyedele – PwC West Africa Tax Leader, and Research Director at Nigeria Economic Summit Group (NESG) Fiscal Policy Roundtable said the launching of the Citizen Perception Report, a first of several research pieces to be published in support of its tax reform and advocacy vehicle “Better Tax”is good for the economy.

He explained that Better Tax seeks to close knowledge gaps in fiscal policy and create a sustainable framework to actualise the Federal Government’s inclusive economic agenda.

Launched in Lagos, the citizens perceptions report, which is the product of a nationwide perception survey cutting across households and small businesses in the tax value chain, tasked government to establish an Office of Tax Simplification (OTS) among other recommendations targeted at demystifying complex provisions in the nation’s tax laws and boosting dwindling revenues from the non-oil sector of the economy.

Chairman, NESG Fiscal Policy Roundtable, Sarah Alade said, the core concept of the Roundtable was to reflect the needs and objectives that forms the basis of a robust fiscal reform platform focused on mobilising and growing the country’s tax revenue.

The IMF estimates that revenue collected in 2016 across all tiers of Government was only about six per cent of GDP. Historically, more than 70 per cent of those revenues have come from the oil sector while the non-oil sectors, which account for more than 90 per cent of GDP, have historically contributed about 30 per cent to revenues.

“This limits Nigeria’s ability to credibly execute its development plan and fund critical social sector programmes. It also leaves Nigeria very vulnerable to macro-economic shocks from low oil prices. The most recent fall in oil prices threw Nigeria into a fiscal crisis with spill-over effects on the economy resulting in a recession in 2016. Building a strong revenue base that is balanced between the oil and non-oil sector is therefore critical to sustainably financing Nigeria’s development programme and long-term macro-economic stability.”

According to Alade, data from the Citizen Perception Survey reinforces the appalling level of fiscal responsibility in taxpayer education, which fuels apathy and low morale among taxpayers. She said: “beyond the general clamour for increasing revenues and the correlation with higher tax rates, there are other issues around taxpaying in Nigeria. There is the presumption that the Nigerian citizenry is apathetic to the payment of taxes, which makes the findings of the Citizen Perception Survey crucial. The findings show that Nigerians are not averse to taxpaying given proper education and expenditure transparency on the allocation and application of resources by the Government.

Oyedele, who shared evidence-based data from the Citizen Report during his technical presentation at the event, disclosed that “low tax compliance results from tax complexity, crisis of trust in the government and inadequate social contract deliverables; while tax officials were constrained by inconsistent tax policies, limited resources, unrealistic targets, and inability to influence service delivery, among others”. Citing the date from the Citizens Perceptions Reports, he said that over 70 per cent of Nigerians believe that “it is not wrong to pay taxes”. This sentiment, is fuelled by the issues around the social contract between the government and the citizenry

During the panel discussion on “Making Taxation Work for Nigeria – Issues, Solutions and Priorities”, Prof. Teju Somorin emphasized the need for balanced fiscal responsibility between the government and the citizens. President, Manufacturers Association Of Nigeria Engr. Ahmed Mansur also emphasised the fact that tax revenues are part of the bigger issue of the missing link in the social contact between the people and the government.

In the next few months, the NESG Fiscal Policy Roundtable will continue to leverage Better Tax to disseminate the findings from its analysis of the fiscal space, both from the revenue and expenditure viewpoint

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York based Talk Markets and Investing.com, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]; Tel: +2347065163489.

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