Revenue crisis, compounded by the coronavirus pandemic, may push Nigeria to further borrowing, therefore pushing budget deficit beyond the projected
N4.28 trillion to at least N6 trillion. This comes, even as imposition of new taxes on citizens faces pushback.
With expected rise in huge costs of about N6.1 trillion from contingent liabilities from the power sector and other sectors, as well as N3.1 trillion in preliminary estimate of revenue forgone from VAT policy choices and compliance gaps in 2019, there are worries about imposition of new taxes on already burdened private sector and citizens.
The International Monetary Fund in its recent policy document, had urged Nigeria to slow down on its aggressive tax drive due to impact of the COVID-19 on businesses and households. On imposition of new taxes and rising liabilities, he said: “The truth of the matter is that the incidence of tax is borne by consumers. Government may forgo one type of tax by way of concession but may be compelled to levy another type of tax to make up for the concessions with a view to balancing out its budgeted figures. Of course, taxes and levies affect the disposable income of ordinary citizens and may increase the poverty index if not well balanced out.
Although government argues that what the country is faced with is not a debt problem, but revenue challenge, he said the debt would become problematic if revenue base was not strong enough to service the debt. “It invariably becomes a debt problem. DIRECTOR-GENERAL of the Nigeria Employers’ Consultative Association , Dr. Timothy Olawale, described the economic management style of the Federal Government as non-prudent, especially if the provision of the Fiscal Responsibility Act would be adjusted by more than 10 percent of the GDP.
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