…As Experts say Proper implementation of Finance Act will reduce govt borrowing***
The National Co-operative Financing Agency of Nigeria (CFAN), has appealed to the Federal Government to grant tax holiday for companies producing goods and services in the country.
Mr Emmanuel Atama, the Executive Secretary of CFAN, made the appeal in an interview with newsmen in Abuja on Thursday, saying the move would help cushion the effect of rising inflation in the country on Nigerians.
He also appealed to the Central Bank of Nigeria (CBN) to develop necessary instruments to cushion the effect of the inflation on the people, which he said could lead to a rise in crime rate.
“The impact is that some families will not be able to feed effectively and in essence, it will negatively impact on the general livelihood of the people.
“Our reaction is for the government to see what it can do to cushion the effect of this inflation especially now that Value Added Tax (VAT) has risen, electricity tariff and petrol prices have also gone up.
“You discover that when the prices of goods and services are also on the increase, this will leave the poor masses with nothing left for them to take care of themselves.
“What we are saying is more of appeal especially for the CBN to put necessary instruments in place to curtail this because when it continues like this, the people will become helpless,” he said.
Atama added: “When the people become helpless, they might resort to all forms of malpractices including crimes which will have negative results on the lives of people.
“In other climes, the government gave out tax holidays or incentives to producers of goods and services to cushion the effect of COVID-19 pandemic.
“What we are saying is that subsidy could be removed on consumption but it could be given to producers of goods and services and when this happens, you will now see that prices of goods and services will become affordable to the citizens.
“What we are saying, in essence, is more or less an appeal to the government to use necessary instruments to put the economy in shape.’’
The executive secretary said that some of the recent increase approved by the government especially that of stamp duty charge on deposits negated the financial inclusion strategy with respect to banking.
The National Bureau of Statistics (NBS) in its latest Consumer Price Index (CPI) reported that the inflation rate increased by 13.22 per cent in August.
The report said the figure represented 0.40 per cent points higher than the 12.82 per cent recorded in July.
“On a month to month basis, the headline index increased by 1.34 per cent in August and this is 0.09 per cent higher than the rate recorded in July (1.25 per cent).
In the meantime, Mr Lukman Kareem, a tax expert, says proper implementation of 2019 Finance Act will go a long way in reducing the extent of borrowing by the government.
Kareem stated this in an interview with the newsmen in Abuja on Thursday.
The 2019 Finance Act, which was signed into law by President Muhammadu Buhari in January, introduced changes to the acts on Companies Income Tax, Value Added Tax (VAT), Petroleum Profits Tax, Stamp Duties, Personal Income Tax, Capital Gains Tax, Customs and Excise Tariff among others.
The amendments made by the Finance Act are intended to raise the necessary revenue required to defray public expenditure, support a sustainable increase in public revenue and ensure that tax law provisions are consistent with the national tax policy objectives of the Federal Government.
Kareem, a tax expert with Karkay Matrix Solution, said borrowing was not a bad idea, but depended on the timing and essence of such loans.
He explained that the act, if fully implemented, would reduce borrowing drastically since the Internally Generated Revenue (IGR) would increase.
According to the expert, it is advisable that the government cut down some costs and make the best use of what it has in terms of revenue in view of the country’s current debt profile
“The reviewed Tax Act has indeed increased our revenue base as revealed in a report from Executive Chairman of Federal Inland Revenue Service ((FIRS) where he said stamp duty charges now generate over two billion naira weekly. This is from stamp duty alone.
“Meanwhile revenue from VAT increment of 50 per cent will obviously amount to another whooping sum.
“All we need in this country is proper tax administration and management, Nigerians will definitely be willing to pay tax, if it is being used judiciously. Transparency and accountability is Key in tax Administration,” he stated.
Similarly, Mr Niyi Akinsanya, another financial expert, also said that tax should account for a major source of revenue for any government.
Akinsanya noted that the Finance Act 2019 brought about sweeping changes which would increase the revenue of government, especially in the areas of indirect taxation following the increase of VAT.
According to him, the act allows the collecting agencies to focus their energies on the major players with high turnovers in the various industries instead of expending energy on small companies with meager turnovers.
“This way, smaller companies are encouraged to reinvest and grow, which is a display of foresight by the current administration.
“If the long term goals which influenced the contents of the Finance Act are achieved, it will no doubt increase government revenue and consequently, reduce the need for borrowing to fund our budgets,” he added.