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The Nigerian Senate has urged the Federal Government to cease providing tax waivers and concessions to corporate organizations, expressing concerns over substantial revenue losses attributed to these incentives.

The call comes on the back of efforts by the federal government to mitigate dwindling revenue generation.

The Senate Committee on Appropriations proposed an alternative approach during an interactive session on the 2024 budget with Wale Edun, Minister of Finance, and Atiku Bagudu, Minister of Budget and Economic Planning.

The committee, chaired by Adeola Olamilekan, underscored the need for companies to fulfill their tax obligations entirely and suggested that they pay their taxes upfront, with the option to apply for rebates if deemed necessary.

During the session on Wednesday, concerns were raised about the abuse of economic policies, leading to significant revenue loss. Minister Wale Edun informed the panel that Nigeria had lost approximately N3 trillion to tax waivers this year alone.

In response to these concerns, Senator Mohammed Sani Musa proposed adopting a system similar to withholding taxes for tax waivers, suggesting that companies must prove tax compliance before receiving rebates.

Ali Ndume echoed the sentiment, urging the government to follow the bold decision on fuel subsidies and put an end to tax credits and waivers. He emphasized the importance of addressing revenue collection loopholes that benefit a few at the nation’s expense.

Committee Chairman Adeola Olamilekan proposed a transitional approach by reducing the provision for waivers by 50 percent. Edun assured the committee that the federal government’s fiscal policy and tax reform committee would carefully consider the lawmakers’ advice.

While appreciating the need for reform, Edun stressed the importance of practicality in implementing such policies, acknowledging that the details require careful consideration. He highlighted the agreement to move towards a rebate system rather than the upfront granting of waivers and incentives, including interest incentives.

“In trying to implement such a laudable policy, it is important to look at the practicality and decide how it can be done, whether it can be done in one fell swoop, or whether there are some obvious exceptions. But I think we are all agreeing that we should try as much as possible to move to a rebate system rather than upfront granting of waivers and other incentives, even including interest incentives.

“The fiscal policy and tax reform committee is very careful about that, and what you have advised today will be taken as important input into our work,” said Edun.

The Senate’s call for the discontinuation of tax waivers and concessions reflects a broader effort to enhance revenue collection and address fiscal challenges, aligning with the government’s commitment to expanding tax nets as part of President Bola Tinubu’s tax reforms.

However, should the call be heeded, it would present a new hurdle considering that the government has relied on tax waivers as a tool to incentivize businesses, particularly during a period when the nation’s economy is facing a downturn.

The experts praised it, from Lagos to London to New York. But yours truly did not buy it. Yes, I was possibly the only person who challenged the core thesis of floating the Naira. As the banks, traders, etc trumpeted the consequential policy, I cautioned that Naira could struggle to attain a stable state.

Nothing big, I only used what I learnt from AO Lawal’s textbook in secondary school (I did not do Economics in SSCE, rather, I bought the book, read and took external GCE while in secondary school, since those days, it was either Further Maths or Econs; I chose Further Maths for SSCE). I wrote on June 30 2023 thus.

‘In his O’ Level textbook on economics, AO Lawal explained demand and supply and the movement of price on the demand-supply curve. If I apply what he explained in that book, floating naira with no capacity to earn USD dollars will kill Naira, because there is an asymmetric imbalance on demand and supply of USD in the Willing Buyer, Willing Seller nexus. In other words, two people may each have $100 to sell while twenty people want to buy each $100. If you do not close that number to near parity, the equilibrium point will keep shifting and I do not see how Naira will stabilize because demand outweighs supply here.’

‘I have read many theses on how Naira will stabilize to N680. Good luck. But if you visit Marina Street in Lagos, and climb one of those tall buildings (I have friends who give me access whenever in Lagos), look at the far habour, count the number of ships coming into and leaving Nigeria – and then examine their capacities. Most come loaded, most depart empty! What does it say? We spend more US Dollars than we can “create”.’

Can someone hear me now? I think we make sense on this feed and should be a required Follow for Nigerian leaders. Hahahaha. Lol

Thank you for this. I also remember sharing your sentiments and trying to warn people.

The funniest part is that there is still a fx black market despite their claims that floating the Naira will stop multiple
exchange rates. The so-called experts are now complaining gsk etc

— Vincent (@realgbolashow) December 7, 2023