Zainab Ahmed, minister of finance, budget and national planning, says the best measures to reduce the nation’s high debt burden are collection of more taxes, and effective blocking of revenue leakages.
Ahmed said this at a workshop on tax expenditure organised by the Economic Community of West African States (ECOWAS) Commission in Abuja, on Tuesday.
The workshop was aimed at examining directives on harmonisation of tax expenditure management practices and the monitoring and evaluation of tax transition in ECOWAS member states.
Represented at the event by Fatima Hayatu, director, technical services in the finance ministry, Ahmed said the issue of tax expenditure was of great concern for the government.
In the federal government’s fiscal performance report, the cost of servicing debt surpassed revenue by N310 billion in the first four months of 2022. The minister, however, maintained that the debt burden is not beyond what the government can handle.
“If we have more taxes and redirect the taxes to the right fiscal sectors of our economy, we will reduce our debt burden,” Ahmed said.
It is not as if the debt is beyond what the government can handle. If you look at the ratio of the debt to the gross domestic product (GDP), I think the government is doing well.
“The debt is not something that cannot be surmounted. The programme today is to block leakages where the taxes are being diverted. So, if we block leakages, and if it is transparent, Nigeria will borrow less and we will have more money to finance other sectors”.
Ahmed said reforms in tax expenditure management were gaining traction in Nigeria, a development that had resulted in the continuous development of in-house capabilities and internal restructuring in agencies for greater efficiency.
She also disclosed that the government would commence the “rationalisation of tax exemptions by phasing out antiquated pioneers and other tax incentives” for matured industries.
The minister said that contrary to what was obtained in the past, the country is now reaping the benefits of tax exemptions and concessions given to small businesses.
“A lot has changed, the system is more transparent and tax expenditure that the government has given, which is tax for bond is to encourage ailing and infant industries to be able to do more and employ more youth,” Ahmed explained.
“I am glad to say that the tax expenditure that the federal government has been giving has encouraged industries and manufacturers to stay afloat even with the COVID-19 pandemic and also to say that they have been able to keep their staff.
“That, to us, is an achievement because we don’t want people to lose their jobs which would reduce the insecurity we are facing.”
According to Ahmed, Nigeria was committed to strengthening transparency in its public financial management towards the drive to boost domestic resource mobilisation.