Debt Service of $4.2 Trillion: FG Admits the Economy Is In Real Trouble.
The Federal Government acknowledged on Tuesday that the country’s economy is in trouble, with a $4.2 trillion debt service bill due in 2021.
Senate President Ahmed Lawan alluded in his goodwill message at the 40th Anniversary of the Chartered Institute of Taxation (CITN) in Abuja that debt service increased from $2.5 trillion in 2019 to $4.2 trillion in 2021, while the major revenue-generating agencies’ contribution to the consolidated revenue account in 2020 was $8.something trillion.
‘Last year it got to $11. 93 trillion. And today, we have almost half a trillion deficit of expenditure in terms of infrastructure delivery. Invariably, the economic problem in this country cannot happen without the active operation and collaboration of especially elitist groups like CITN and other professional bodies,’ he stated.
Lawan, who was represented by his special adviser on Economic Matters, Prof Nazif Abdullahi Darma, explained that Nigeria’s economy is a growing one with a population of over 200 million and a three percent growth rate. This implies that every year, 6 million people are added to the country.
‘Our economy is a growing one. We have over 200 million citizens. We have a growth rate of over three percent. Meaning, every year, 6 million citizens are added.
‘On a daily basis, 26,000 babies are born. These demographic indicators are real challenges of providing quality social service welfare for its citizens,’ he stated.
‘In most democracies in the world today, people’s participation in governance is predicated on the ability of those citizens to pay taxes as and when due. And that is where we saw a lot of fundamental questions raised on the way and manner the economies are being managed because taxpayers are actually the contributors of the resources that are used in running such economies,’ he noted.
In his remarks, Vice President Yemi Osinbajo had lamented that Nigeria’s tax to GDP ratio is the lowest in the world while its comparators are in the neighborhood of about 15 percent to 25 percent.
This, he noted, was symptomatic of undue reliance on oil revenue as a result of fiscal imbalances in the nation’s financial landscape.
Osinbajo, who spoke through the Minister of Finance Budget and National Planning, Mrs. Zainab Shamsuna Ahmed, who in turn was represented by the Permanent Secretary, Ministry of Finance Budget and National Planning, Mallam Ahmed Aliyu, stated that tax collection has improved to the extent that FIRS exceeded its target for the Year 2021 with N6.450 trillion from both oil and non-oil revenues.
‘Nigeria’s tax to GDP ratio is one of the lowest in the world. It is at about 8 percent while our comparators are in the neighborhood of about 15 percent to 25 percent. Even in Africa, we can surely do better. This is symptomatic of undue reliance on oil revenue as a result of fiscal imbalances in our nation’s financial landscape. The achievement of the government’s objective of widening the tax base for improved revenue collection through voluntary compliance in line with international best practice will be enhanced through co-operation with and support of the institute being a major stakeholder in the tax system of our nation.
‘We are happy with the results of sustained efforts towards enhanced tax compliance despite the global economic challenges occasioned by the COVID-19 pandemic and the disruption of economic activities by 2020 protests. Nonetheless, the tax administration has made significant improvements in collections. FIRS was able to exceed its collection target for the Year 2021 with N6.450 trillion from both oil and non-oil revenue,’ Osinbajo stated.
Earlier, the president of CITN, Adesina Adedayo, said that the institute is adding meaningful value to national development in regulating the tax profession and bringing taxation issues to the front burner.
‘Therefore, we consider it worthwhile to reflect over the past years, celebrate what we have achieved, take cognizance of our shortcomings, and continuously reposition the institute for the next level of greatness,’ he said.