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Mar 2022

The Fiscal Policy Roundtable of the Nigerian Economic Summit Group (NESG) on Thursday, March 10, 2022, had an event to discuss the Impact Assessment of the 2021 Finance Act.

 

In his welcome remarks, the CEO of the NESG, Mr ‘Laoye Jaiyeola, who was represented by a Board member of the NESG, Mr Nnanna Ude, said that the Fiscal Policy and Planning, Trade Investment and Competitive Policy Commission of the NESG organised the event to address the impact of the 2021 Finance Act on the macro and micro economy of the nation. He stated that the primary objective of the 2021 Finance Act is to enhance non-oil revenue and support the implementation of Nigeria’s annual budget and that the Act addresses critical areas including fiscal policy, domestic mobilisation, tax administration, financial sector reforms and public financial management, noting that the 2021 Finance Act will accelerate non-oil revenue generation and help close the widening fiscal gap.

 

Furthermore, Mr Ude noted that the Finance Act poses a dilemma on how much tax revenue can be raised without a deleterious impact on households and that it introduced some tax increases that may be burdensome for individuals businesses, and that impact assessment of the 2021 Finance Act with the aid of evidence-based advocacy to assess the impact on households, sub-sectors and its wide economic impact will aid the identification of crucial bottlenecks while articulating an action plan that will assist the implementation of the Act.

 

The thematic lead, Fiscal Policy and Planning, Trade Investment and Competitive Policy Commission of the NESG, Mr Taiwo Oyedele, said that the fiscal landscape must be seen from the perspective of public debt, public revenue and public spending, noting that Nigeria’s debt is growing faster than her revenue. He stated that Nigeria’s tax base is small and faces structural problems, but policies must be instituted to solve the issues by ensuring appropriate fiscal policy responses and review of extant laws while encouraging growth and raising revenue.

 

During the panel discussion, the president of the Manufacturers Association of Nigeria (MAN), Engineer Mansur Ahmed, stated that there was a need to put short- and long-term considerations into the implementation of the 2021 Finance Act. He reiterated the need to balance revenue mobilisation alongside tax burden on taxpayers and that for government to improve revenue, there is a need to critically analyse the fiscal space, considering that Nigeria’s tax net is not broad enough to ensure that taxable people pay the right amount of taxes as at when due. “The finance act 2021 introduced technology for tax collection. It must be implemented so that taxpayers don’t see it as an additional burden, and stakeholders should be sensitised, helped or exempted, particularly small and medium scale businesses. Regulators should become more effective and help promote the growth of relevant sectors and should not see themselves as gate-keepers of incentives but help ensure that the implementation of the Act does not hamper small businesses. The manufacturing and industrial sectors should be supported to strengthen their capacity and competitiveness, especially considering the African Continental Free Trade Area (AfCFTA),” Engineer Ahmed stated.

 

On his part, the Vice-president and managing director of Coca-cola Nigeria, Mr Alfred Olajide, stated that all arms of government have to collaborate to attract foreign and local investors, noting that sections of the 2021 Finance Act, including the Excise duties, are targeted at production, as opposed to consumption.  

 

In his statement, Head research department, Nigeria Labour Congress (NLC) Dr Onoho’Omhen Ebhohimien, who represented the president of the NLC, Comrade Ayuba Wabba, revealed that subsidy of petroleum products ought to be provided to firms to help reduce production costs and passed on down to encourage consumption, but that is not the case in Nigeria due to several factors including the fact that Nigeria imports petroleum products which makes the country subject to the volatility of the foreign exchange market. “Insurance of the petroleum products, the vessels and freight charges make up 74 percent of petroleum subsidy in Nigeria. Every barrel of crude oil contains 1,500 bye products. We export the crude and import only six refined products. The theory of subsidy is not sustainable,” he stated.

 

The chief executive officer, Nigeria Exchange Limited, Mr Temi Popoola, said that the 2021 Finance Act is helping the government diversify its resources and has helped provide clarity, strengthen the capital market and eliminate double taxation. He restated that the Act has helped boost investor confidence, but it still has the potential to stifle investors, which may create long-term problems.