The Debt Management Office (DMO) has warned that reports suggesting the suspension of telecoms tax regime will hurt the country’s revenue target for 2023.
Director General of DMO, Mr. Ben Akabueze, raised the red flag during a live interview monitored on Arise Television yesterday.
Hie clarifications came after the Minister of Finance, Budget and National Planning, Zainab Ahmed, stated that the government was projecting a total revenue of N8.46 trillion, out of which N1.9 trillion is expected to come from oil-related sources while the balance is to come from non-oil sources.
This was as he denied knowledge of the suspension of the telecoms tax, as he said he only got to know of it through media reports., Akabueze said his office has not been advised of the suspension by the Federal Government.
The DMO boss noted that the economic team had while making revenue projections under the Medium Term Expenditure Framework (MTEF) for 2023 -2025 taken into consideration revenue from telecoms tax, and that altering that plan will hurt the economy badly.
‘‘The MTEF which was recently approved by FEC includes projections for telecoms tax and is presently before the National Assembly. Over the last two weeks, the Finance Committee of the National Assembly has been holding engagements with agencies of government on this. If we are now advised that this tax is no longer applicable, we will have to rework the MTEF 2023-2025’’
He disclosed that the implication of reworking the MTEF was that the projected revenue will reduce while deficit will increase; which means the country will either have to cut down on expenditure or increase debt.
Akabueze warned further that the country has a serious revenue problem which if left unaddressed will snowball into full blown debt crisis.
The debt management expert said if a look is taken at all the indices of debt sustainability, it would be discovered that where Nigeria has major problem is in the area of debt service to revenue which is where the country is testing its limit of sustainability that must be addressed quickly.
On why the country is not cutting down on expenditure, he said Nigeria’s public expenditure to GDP ratio is the lowest on the continent and as such, cannot be categorised to be in a state where the country is spending too much money but rather in a state where truly government is not spending enough money.
Compared to its peers in Africa and other parts of the world, Akabueze was worried that Nigeria is at the bottom of revenue to GDP ratio, stressing that the principal source of funding for government remains taxation and especially personal income tax.
‘‘We are in a place today where the top one million personal income tax payers in South Africa, pay more taxes than an entire 40 million personal income tax payers in Nigeria.
He said the telecoms tax was not just what the Ministry of Finance woke up one day to introduce because it was designed, planned and included in the Finance Bill went through the Federal Executive Council (FEC), National Assembly as an Executive Bill from President Buhari and was also subjected to the test of public hearing and finally signed and passed into law.
The DMO boss added further that all those involved in the drafting of the bill had robust engagement with the Customs, Nigerian Communications Commission (NCC) for a smooth implementation process.
