Based on the soon to be passed 2016 Budget, the Federal Government intends to inject N350 billion into the Nigerian economy in the next few months.
The money is intended to revive significant activities back into the economy.
The Minister of Finance, Kemi Adeosun disclosed this to State House correspondents at the end of the two-day National Economic Council (NEC) Retreat at the Presidential Villa, Abuja.
It will partly be used to offset contractual debts in the country.
The federal government has given the direction it will take to run the economy in 2016.
According to the federal government, it will fully implement the 2016 budget so as to recover from the slowing GDP growth and to forestall the remote possibility of recession.
A statement from the Ministry of Finance Thursday said the Minister of Finance Mrs. Kemi Adeosun made the declaration in an article she wrote.
According to the statement, the finance minister noted that the focus of the current administration is to stimulate the economy and achieve a real GDP growth rate of 4.2 per cent by the implementation of the draft 2016 budget.
Adeosun added that “the administration is also determined to reduce the cost of governance, extract efficiencies in public service and enhance revenue collections. The administration plans to increase government expenditure on infrastructure i.e. Transport, Roads, Housing and Power with a view to achieving a substantial increase in gross capital formation and to fund the budget deficit and the negative trade balance in a cost effective and efficient manner, which will keep the government within the acceptable debt sustainable ratio that is expected of most emerging economies.”
The Minister who acknowledged the impact of the sliding oil prices on Nigeria’s economy said, “our main macroeconomic objective is to use a government expenditure-led growth strategy in 2016, combined with a stimulant approach based on injections of more efficiently collected revenues and blocking of leakages. The combination of these fiscal injections will have a catalytic multiplier effect on the GDP growth rate.”
“The budget deficit is estimated at N2.2trn or 2.16 per cent of GDP based on an estimated benchmark oil price of $38pb. In view of present realities and the dynamics in the global oil markets, we have braced ourselves for the probability of a further decline in oil prices,” she said.
Though the government believes the average price of oil in 2016 will recover, “we have developed a shadow budgeting process with tactical responses to build in the flexibility in our borrowing needs. This way, we will not undermine the fundamental principle of the economic stimulus model used by countries facing a contraction in economic activities and growth,” the finance minister said.
Adeosun pledged the resolve of the current administration to go ahead with its robust commitments on infrastructure despite the present oil price.
She said, “We are firmly committed to the countercyclical budget expenditure model. Therefore we will not reduce our investment in infrastructure i.e. Transport, Roads, Housing and Power. Our deficit will expand by N0.8trn to N3trn, which will be 3per cent of GDP. This is still within the comfort zone for the international rating agencies.”
The Federal Government has paid N407, 076,805,386.30 subsidy claims to oil marketers to end the lingering fuel crisis.
A statement from the federal ministry of finance signed by Mr. Marshall Gundu, Director, Press of the ministry said the Minister of finance Mrs. Kemi Adeosun has confirmed the payment to the oil marketers.
Adeosun noted that President Muhammadu Buhari had directed that the payments should be “made immediately in order to bring to a quick end the lingering fuel crisis which has caused great suffering to Nigerian families and businesses.”
The minister of finance also said that “despite dwindling revenues, the government is committed to ensuring continuous availability of fuel to Nigerians.”
Wednesday’s payments to oil marketers she said “include arrears from the 2014 financial year as well as payments for the current year.”
With this payment, the federal government she said expects the recipients to “ensure adequate supply of fuel to end the persistent fuel shortage in the nation.”
By making this payment to oil marketers, the federal government said it has shown its full commitment “to meeting its financial obligations in respect of fuel subsidy.”
The Minister further implored the major oil marketers to reciprocate government’s action by doing all they can to bring the fuel scarcity to an end.
The statement said details of the approved payments under the subsidy scheme will be published in the national dailies as has been the practice.
The newly sworn-in Minister of Finance, Mrs. Kemi Adeosun, Thursday pledged to do her best to improve the nation’s economy by bringing innovative ideas into the sector.
Mrs. Adeosun who hails from Ogun Waterside Local Government Council of Ogun state, made this known while being received at the Ministry’s headquarters in Abuja.
The former Commissioner of Finance in Ogun state said she has resolved as ever to continue to make hard work her watchword in her efforts to salvage the economy.
Receiving the handover note from the Permanent Secretary of the Ministry, Haruna Muhammed, she called on staff and stakeholders in the financial sector for harmonious working relationship for a successful tenure.
“I promise to make hard work my watchword as a Minister of Finance. I will do my best to bring innovations into the system to improve the economy and do my best in line with the vision of Mr. President to bring a new lease of life to our people without learning any stone unturned,” Adeosun said.
She expressed gratitude to President Muhammadu Buhari for appointing her as a Minister of the Federal Republic of Nigeria, saying that she would whole-heartedly pursue the charge mantra of the present administration throughout her tenure.
Mrs. Adeosun 48 holds a Bachelor of Science degree in Economics from the University of East London and a postgraduate Diploma in Public Financial Management from the University of London.
She has a vast experience which spanned over 26 years in the financial sector both in the United Kingdom and Nigeria.
… I’m ready for probe – Ex-minister
The former Minister of Finance, Dr. Ngozi Okonjo-Iweala, has denied claims she spent $2.1 billion out of the Excess Crude Account without authorization and has offered to face any inquiry over the allegation.
Reacting to Monday’s claims against the former finance minister by some governors after the National Economic Council (NEC) meeting in Abuja, her media adviser, Paul Nwabuikwu, said “the allegation by some governors that former Minister of Finance, Dr Ngozi Okonjo-Iweala spent $2.1 billion out of the Excess Crude Account without authorization is false, malicious and totally without foundation.”
Nwabuikwu in a statement made available to The Nation on Tuesday said there was no unauthorized expenditure from the ECA under Okonjo-Iweala’s watch in the Finance Ministry.
“Decisions on such expenditure were discussed at meetings of the Federation Accounts Allocation Committee (FAAC) attended by finance commissioners from the 36 states,” he added.
The former minister insisted that claims she “spent $2.1 billion without authorization” were simply not credible given that details of government receipts and expenditure were made public.
Tax payers wishing to reduce their tax burden in a federal system should not need the intervention of the central government
Most countries have a wide array of taxes, each of which is applicable in clearly defined circumstances. The proliferation may however be more noticeable in federalist countries like Nigeria. By virtue of powers conferred by the 1999 Constitution, taxes and levies in Nigeria are charged at three levels, i.e. Federal, State, and Local. This follows a demarcation of functions among the three tiers and the distribution of legislative powers between the Federal and State Legislatures—Ade Ipaye in 2010.
The recent announcement by the Minister of Finance about the federal government’s intention to “streamline and harmonise taxation across the country” could not have come at a worse time. As is expected in a democracy, it is right for tax payers to ask for tax reforms that can lessen the burden of tax payers, be they individual or corporate. But for the federal government to be thinking of a major tax reform across the country after the leader of the federal government has called for a national conference to discuss the nature of Nigeria’s multiethnic federalism is to put the cart before the horse.
Harmonisation of tax in a federal system is anathema, particularly to those who care about public finance for development, more so in a federal system that cannot develop solely on the strength of on revenue from non-renewable resources. A multiple form of taxation is an essential characteristic of federal form of governance all over the world. Over the years, Nigeria’s federal system has been watered down by decrees issued by military dictators to emphasize harmonisation, rather than accepting that a federal system must have diversity, to enforce homogenisation instead of appreciating heterogeneity. Efforts to harmonise tax across a federation is like attempting to “reform the irreformable,” to borrow some phrase from the Minister of Finance.
Those who believe that the president is not sufficiently serious about the national conference cannot but smile to hear that his minister of finance and coordinating minister for the economy is enthusiastic about harmonising taxation at a time that the president has asked the country to dialogue about what kind of future it wants. Is the intention of the federal government to harmonise the country’s tax systems another attempt to pre-empt the national conference, just as the intention of the president to submit recommendations from the conference to a national assembly that is clearly hobbled by the desire to keep Nigeria federal in name and unitary in structure?
It is not expected that tax payers all over the world would readily resist multiple taxation. Thus, the recent call by The Tax Payers’ Association of Nigeria (TAPAN) is in order in a democratic system. It is a different matter whether avoiding multiple taxation is realistic in a federal democracy. Tax payers wishing to reduce their tax burden in a federal system should not need the intervention of the central government, as much as they need to negotiate with state governments. Any central government that promises to harmonise taxation in a federal system is either playing to the gallery or being deliberately unrealistic. For any central government to be in a position to harmonize tax across a federal political space, it will need to amend the current constitution to the effect of removing taxation from the concurrent legislative list. To attempt to do that is to call for an end to the federal system.
Tax payers do have a right to expect that at all levels there is a correlation between tax paid and public service given by the government. But in a federal system, where most public goods and services are provided and delivered at the subnational level, tax payers should cry to the states in which they pay taxes for transparency, accountability, and equity. Crying to the federal government to harmonize tax collection is to undermine the country’s dwindling federal system and to encourage the central government to deny states and local governments of their right to raise revenue and responsibility to fund improvement of the quality of life of citizens in specific states.
Even though efforts to water down the federal character of Nigeria has been on for over forty years under the inspiration of military dictatorships, it is now too late in the day for an elected government that has in fact announced convocation of a national conference to put energy into harmonising taxation in the country. This is a function that should be left to the national conference to decide. It is common knowledge that fiscal federalism requires more funds at the subnational level in a federal system, if regular and prompt good services are to be provided by the government for citizens and business communities at the subnational level. It is also true that the relationship between the citizen and the central government in today’s Nigeria is more of alienation than dis-alienation, for several reasons.
One, the central government is overfunded and under monitored by citizens. In fact, public expenditure by the central government appears ‘un-monitorable’ in Nigeria, largely on account of the distance between the central government and the average citizen. Second, the central government relies for most of its expenditures on revenue from non-renewable resource— petroleum. This situation gives the central government a feeling that it is those in power at a given time that are principal stakeholders in the process of governance and that citizens are onlookers. For example, it is easier for people of Lagos State to demand for improvement in provision of public service in Lagos than it is for citizens to influence the federal government to make the country’s most important motorway, the Lagos-Ibadan-Benin safe for movement of persons and goods. L. Enrique Garcia’s claim that there is evidence to suggest that “greater natural resource revenue, by disconnecting spending decisions from the need to levy taxes on the population, contribute to a less efficient use of the extra resources in public service provision” applies to Nigeria as much as it does to Latin America.
It is hoped that today’s piece will stimulate rigorous debates among tax specialists and federalists on the controversial topic of harmonising tax across the country in a federation. Such debates will help those planning to represent their communities at the national conference to provide realistic recommendations on how to address the issue of ‘multiple taxation’ in a country that appears poised for further federalisation, judging by the tone of presentations of most regions to the national conference advisory committee so far.
As the country’s fortunes dwindles from the sale of crude oil, the Coordinating Minister for the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala, has instructed the Federal Inland Revenue Service (FIRS) to employ “any efforts” to grow the nation’s revenue base.
She urged the FIRS to consider birth certificate as registration for taxation purposes as obtained in South Africa and Namibia, where tax registration and TCC are being linked to birth certificate.
Represented by the ministry’s Permanent Secretary, Mr. Danladi Kefas, she said FIRS’ efforts to grow the nation’s revenue base remain a step in the right direction, most especially, in the face of the dwindling oil income.
The minister said,”any efforts by the FIRS to grow the revenue base of the country are welcome and everybody must contribute his or her share, especially, when somebody is earning taxable income.”
A statement from the FIRS said Okonjo-Iweala gave the directive in Abuja on Thursday at a one-day sensitization workshop for Local Staff of Embassies on PAYE, Withholding Tax (WHT), Value Added Tax (VAT) on Contracts, and Taxpayer Identification Number (TIN).
The statement signed by Emmanuel Obeta, Director, Communications and Liaison Department quoted Okonjo-Iweala as saying that “you cannot escape tax and claim to be a responsible citizen of that country. Once you pay tax, you can now have the benefits that come with payment of taxes. Tax payment is the backbone of any country.”