The Senate, on Thursday, continued its deliberation on the assumptions of the 2020 Appropriation bill presented to it by President Muhammadu Buhari earlier in the week.
Just as they expressed their reservations on Wednesday on the budget assumptions, the senators further raised concerns on the parameters of the budgets, as they noted that it suggests a grim situation for the economy. They called for more proactive measures to reflate the economy to meet the expectation of Nigerians.
Senator Sandy Onor, Cross Rivers Central (PDP) in his contribution said the expectation that an increased tax would generate more revenue for the country would ultimately translate to more economic woes for the nation’s economy, submitting that the assumptions were faulty.
He anchored his position on the President’s admission during the budget presentation when he said that low revenue generation in the 2019 budget expectation was due to certain low performance in certain sectors of the economy.
Sandy who is the Senate Committee Chairman on Tertiary Institutions and Tetfund argued that if the tax at the time was lower at 5 % and it was so difficult for revenue to be generated, increasing VAT to 7.5% would put more stress on the economy.
“Before now, the 5% VAT has been an issue of serious criticism by many companies and industries that come under it.
“Today VAT is being moved to 7.5 % calls for a lot of concern. If you look at the President’s speech, item number 18, the President has said from his address that ‘receipts from the VAT was below expectations due to lower activities in certain economic sectors in the aftermath of the national elections
“I see the phrase ‘in the aftermath of the national elections,’ deployed just to colour the already articulated and very grim situation that speaks to the issue of certain economic sectors.
“If yesterday when VAT was 5 per cent, we experienced this lower levels of economic activities, today that VAT is 7.5 per cent, we risk not having economic activities at all and the consequences are dangerous.
“I know that in the speech, attempts were made to make it look like a common man has been sequestered from the uncertainties that will come. I do not agree because even the financial plan that is being proposed has made it clear that aspects of taxation especially now that our economy is not doing too well, will not do any good to our economy.
“If you look at Item (a) in the proposed bill you will see and it reads in the President’s speech that promoting fiscal equity by mitigating instances of progressive taxation. If you ask me, I think the plan to increase take is clearly an instance of regressive taxation.”
He said the plan to increase tax was not the best option available but a short cut that would end in dire consequences for the nation with impact on creating more unemployment in the economy.
He tasked the handlers of the economy to rethink a novel means to boost and grow the economy.
“This situation of increasing VAT is a short cut economic recovery, it smacks of intellectual laziness and like all short cuts, I do not think it will drive this country in a proper direction.
“I believe that one of the intricate consequences of this VAT increase will be unemployment and a lot of our youths are caught in acute despondency, once you get out of school and you do not get employment, your life speaks of hopelessness.
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“We need to expand our economy and economic handlers must look for original ways that will not do our economy further harm and spur productivity and ensure that our youths are employed.”
Speaking also on the Taxation policy of the administration, Senator Christopher Ekpenyong, Akwa Ibom North-West and Vice Chairman, Senate Committee on Water Resources said the tax policy was anti-people.
He maintained that poor leadership of the country and management of its resources was responsible for the economic woes and must be reversed.
He said efforts must be made to revive the moribund industry that could drive the process of diversification and boost the economy.
He also called for the review of the procurement process to reflect global best practices in the procurement of critical infrastructure that would boost the economy.
“Why do we make our budget without critical infrastructure?
“We should question the high rate of budgeting for a kilometre of rail at $26m as against $5m by Rwanda.”
While advocating fiscal discipline as critical for a more focused and result-oriented budget to drive the economy, the senators described the N100bn allocation to defence as low.
Senator Emmanuel Bwacha, Taraba South (PDP) led this line of debate and pointed out that it was important to boost the budget for the security agencies as lower funding and poor welfare will not augur well for the military at this times of combating banditry, kidnapping, and the insurgency in the northeast.
Bwacha who is the Deputy Minority leader cautioned that cases of reported compromise by security personnel on issues of kidnapping and even insurgency were due to poor welfare matters and asked the relevant Senate Committees on Defence to push for more funding of the military to meet is the role of securing the country.
Senator Bwacha also said economic diversification was critical to boosting the economy on a sustainable basis and pointed out that the funding for agriculture and other sectors that would have facilitated this were grossly low.
His words: “The President presents budget every year but we do not take disciplinary measures expected to make the budget effective simply because we like to speak from both sides of our mouths.
“It has become an annual ritual and we still do it. The President by tradition would lay the budget and whatever comes out of it is nobody’s business. I’m saying this because since 1999, Budget implementation has not reached 70 per cent. This is very worrisome.
“We are discussing the 2020 budget estimates, is it fair to say we have a 2019 budget which has not been implemented? As we speak now, nothing has been done.
“We have the 2019 Appropriation Act and we are discussing the 2020 budget proposal. We refused to address this aspect of our shortcomings.
“No nation moves forward without discussing what happened in the past. Some of the projects being implemented now are not even in the 2019 budget.
“As a parliament, we do not care to follow up by asking questions for obvious reasons. We need to diversify our economy because we are operating a mono-economy. However, the budget estimates before us did not reflect this posture.
“The allocation to the Agriculture sector does not really portray a nation that is prepared to diversify. We are only prepared to speak from both sides of our mouths. We need to walk the talk if we really want to achieve a significant growth in our economy.
“This is a worrisome development in our budget system. We do not take budgeting as a serious business. It may be difficult to achieve 100 per cent implementation but we could achieve a significant improvement in our budget implementation.
“Oversight functions has also become a ritual. We have to take it seriously as a parliament.”
Senate Committee Chairman on Defence, Istifanus Gyang aligned himself with the observation of Senator Bwacha that the budgetary provision for Defence was low against the background of the security challenges facing the country. He said the security of lives and property were critical to providing a peaceful atmosphere for development.
Senator Ajibola Basiru, Osun Central (APC) and Senator Betty Apiafi, Rivera State (PDP) expressed their worry on the deficit pattern of the budget.
Both senators in their individual presentations, however, argued that the deficit has impacted quite substantially on the funding for infrastructure.
Senator Ajibila Basiru who is also the Committee Chairman, Senate Committee on Diaspora and NGOs, dismissed any claim that the allocation to infrastructure was significant.
He said: “The 2019 budget was not being fully implemented because it was passed and signed into law towards the end of the 8th National Assembly.
“What struck me looking at the budget is that the revenue projections and infrastructure show a 70 per cent deficit in the 2019 budget and in the 2020, it has already been highlighted that N2.18trn will be the proposed deficit. People are looking at allocation to key sectors and the revenue to fund the projects.
“For instance, when you talk of the N256bn being allocated to Works, I have it on good authority that what is even required to take care of the outstanding in the Ministry of Works and Housing is in the excess of N500bn.
“Yet, many people are hailing the N256bn allocated for Works, describing it as huge. We should also be looking at the aspect of progressive taxation.”
Also contributing to the budget deliberation yesterday, Senator Betty Apiafi, called on senators to pay attention to the pattern of debt servicing and the capital budget in the extant budget and the 2020 proposed budget where debt servicing was higher than capital expenditure.
The Senate Committee Chairman on Women Affairs said the discrepancies of paying more money on deficit suggested that the country may be running the risk of increasing debt portfolio at the expense of capital budget.
“I have some misgivings with the budget proposal of 2020. With a debt portfolio of 20trn, debt service of 2.4trn higher than our capital budget of N1.18trn I submit that we are not going to find funds to implement our capital budget.
” I would like us to reflect on 2019 budget where only a paltry sum 294.6bn have been released for capital project as at September 2019, most worrisome is that fact as at June in 2019 budget expenditure was already in deficit of N1.35trn. This deficit is what is becoming a problem to the implementation of the capital budget.
“Given the same indices that we were using in 2019 to make the same measurement of the 2020 it is even more worrisome that we cat meet our revenue targets.
“It is also important for us to know that in 2019 we spent N2.14 trn and in 2020 we are going to spend N2.45 trn for debt servicing. Debt servicing simply means absorbing the interests.
“Our loan portfolio as at today is about N24trn we have not started paying but just servicing this is actually becoming more worrisome because every year we keep if we do not do something drastic, we will keep increasing our debt portfolio and decreasing the debt service.
“The President said the revenue performance of 2019 budget was only 58 per cent and that the budget underperformed because both the oil and non-oil revenue especially oil revenue were below target of 50 per cent as at June 2019.
“He also said that this reflects lower than the budgeted oil projection; deduction of under-recovery, what is under-recovery? Under recovery is fuel subsidy.
” It is no longer a secret that before 2017 fuel subsidy budget used to be in the national budget and the National assembly has the opportunity to monitor that cost.
“Since 2017, NNPC decided to absorb the fuel subsidy as a balance sheet item in their books and called it under-recovery. So NNPC is now importing fuel, paying themselves under-recovery, what happens to Petroleum Product Pricing Regulatory Agency (PPPRA)?
“That is the agency that is supposed to regulate petroleum pricing and determine the supply and distribution of petroleum products in Nigeria. NNPC has usurped the powers of PPRA as well as the powers of the National Assembly,” Apiafi argued.
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