The Senate has disagreed with the Minister of Finance, Budget and National Planning, Zainab Ahmed, and heads of some revenue generating agencies under the ministry on the 2023 – 2025 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF/FSP) which proposed a N12.43 trillion deficit and N6 trillion tax and import duty waivers in the N19.76 trillion budget.
The views of the lawmakers were made known by the Senate Committee on Finance, led by Senator Olamilekan Adeola, during an interactive session on Tuesday at the National Assembly, Abuja.
Ahmed had told the committee that the proposed N19.76 trillion budget for 2023 would have a deficit of N12.43 trillion as a result of projected N6 trillion tax credit and import duty waivers as well as fuel subsidy of over N6 trillion if retained for the whole year.
However, Senator Adeola, who was obviously worried by the submission of the minister asked her to critically review downwards both the projected N12.43 trillion budget deficit and N6 trillion tax and import duty waivers before sending the proposals to the National Assembly for consideration and approval.
What the Chairman Senate committee on Finance is saying
Adeola told the minister to look into the list of beneficiaries of the waivers for the required downward review to N3 trillion, with attendant reduction of N12.43 trillion deficit figure.
- The lawmaker said, “The proposed N12.43trillion deficit for the 2023 budget and N6trillion waivers are very disturbing and must be critically reviewed. Many of the beneficiaries of the waivers are not plowing accrued gains made into expected projects as far as infrastructural developments are concerned.
- “The same goes for the tax credit window offered by FIRS to some companies. Billions and trillions of naira can be generated by the government as revenue if such windows are closed against beneficiaries abusing them and invariably provide the required money for budget funding with fewer deficits cum borrowings.
- “The Nigeria Customs Service should help in this direction by critically reviewing waivers being granted on import duties for some importers just as the FIRS should also review the tax credit window offered to some companies without corresponding corporate social services to Nigerians in terms of expected project executions like road construction.’’
Senator Adeola noted that the issue of waivers should be taken strongly by relevant authorities because Nigeria does not have the capacity for now.
- He said, “We cannot accommodate this N6 trillion tax waiver. It is in this wise that the committee frowns at the projected N12.41trillion budget deficit contained in the 2023-2025 MTEF/FSP and the alarming projection of ‘no provision for treasury-funded MDAs’ capital projects in 2023.
- “This scenario is unacceptable and we must find ways to drastically reduce the deficit humongous figure. It is apparent that the borrowing trends cannot be allowed to continue unchecked and conscious efforts must be made to reduce budget deficits.
- “Achieving these goals requires us to look inwards towards increased revenue generation, blocking of leakages and restraints on what are generally frivolous expenditures by MDAs, particularly the Government Owned Enterprises (GEOs).
- “Our preliminary findings and directives to some of the agencies had led to the payment of millions of naira into CRF in accordance with the Fiscal Responsibility Act 2007 and the 1999 Constitution.
- “It is needless to say that these millions not paid to CRF contribute to the yearly huge budget deficits of the federal government.
- “The investigation was also able to get some agencies to accept opting out of the federal budget altogether based on their internal revenue generating ability. Some of these findings are relevant to the proceedings of this 5-day interactive session.
- “From the challenges thrown up against our economy in terms of the Russia-Ukraine war, the impact of crude oil theft, insecurity, and continuing infrastructure deficits, it is time for all to agree that it cannot be business as usual for government revenue and expenditures.
- “We need to block all revenue leakages and misuse in MDAs as well as control expenditure to free funds for needed infrastructure development and provision of social services.”
What you should know
- Recall that earlier in August, Ahmed, during the presentation of the 2023-2025 MTEF/FSP to the House of Representatives said that the Federal Government was proposing an aggregate expenditure of N19.76 trillion for the 2023 fiscal year, noting that she may not be able to make provision for treasury funded capital projects in the 2023 fiscal year.
- The minister also said the budget deficit for the 2023 fiscal year may be between N11.30 trillion and N12.41 trillion, depending on the choice that would be made by the federal government on the issue of fuel subsidy payment.
- The Tax Credit scheme which is being implemented by the Federal Government especially for road infrastructure enables companies with high tax profiles to construct roads in a negotiated agreement with the government to provide the infrastructure instead of taxes
- The scheme which is for 10 years from its commencement date, is a public-private partnership intervention that enables the federal government to leverage private sector capital and efficiency for the construction, refurbishment, and maintenance of critical road infrastructure in key economic areas in Nigeria.