Amid the defence of the 2024 budget proposals by Federal Government Ministries, Department and Agencies (MDAs), the Senate Committee on Appropriations on Wednesday called on the government to stop granting tax waivers and other concessions to big business operators in the country.
It observed that losses to tax incentives were draining the country’s revenue.
The committee rather subscribed to the idea of corporate bodies paying all due taxes in full and applying for rebates later.
The development came as the Minister of Finance, Wale Edun, told senators that in 2023, losses to waivers stood at over N3trillion.
The committee, which is chaired by Senator Solomon Olamilekan (APC, Ogun-West), had received submissions from Edun and the Minister of Budget and National Planning, Alhaji Atiku Bagudu, on the budget.
A member of the committee from Niger State, Sen. Muhammad Musa, suggested that the government could use the same system it applied to withholding taxes for tax waivers and other concessions.
The lawmaker said, “If you look at tax credits and the waivers, why can’t we adopt a system like what we are doing with withholding taxes? Withholding taxes is going into a fund. After a while, if you can prove that you have paid all your taxes, they pay you your rebate back. So, why can’t we do the same?”
Contributing to the issue, the Senate Whip, Sen. Ali Ndume (APC, Borno State), urged the government to take the same bold step it took in removing the subsidy on petrol in stopping tax waivers.
Ndume explained, “I think we should be bold enough just like the president is very bold. I still want to use this opportunity to commend him for his speech to say there is no more fuel subsidy.
“If he were to consult and talk to people, the subsidy would have still been there. So, if you come out from here and declare that no more waivers, it must be appropriated, and you as the Minister of Finance can do that. We have to make bold decisions.
“Some people are taking advantage of Nigerians unnecessarily and benefiting to the detriment of Nigerians. We talk about tax credits; it is an expenditure and it should go through the National Assembly and there are no two ways about that.
“Look at these illegalities, remove them, and then let us move ahead. If not, this country is being drained by some loopholes. It is our loopholes in revenue collection that is killing this country.
“Few people are taking advantage of it. Look at the tax credit they collected for roads, up till now they did not do the roads. So, what the Constitution says is very clear.
“The ball is in your court, the President has done his own, no more subsidy, five months after Nigerians said yes but let us see the benefit and they are seeing the benefits bit by bit and more is coming.”
The committee held the position that all taxes should be paid into the Consolidated Fund of the Federation, while corporate organisations could later apply for rebates as may be due to them.
Summing up the position of the committee, Sen. Olamilekan said, “Since this is a transition period, can we half it? The provision for these waivers should be reduced by 50 per cent.”
Edun did not argue much with the lawmakers, but merely said that their recommendations would be looked into by the tax reform committee of the government.
He added, “In trying to implement such a laudable policy, it is important to look at the practicality and decide how it can be done, whether it can be done in one fell swoop, or whether there are some obvious exceptions.
“That has to be looked at, and the devil is in the details. But I think we are all agreeing that we should try as much as possible to move to a rebate system rather than up-front granting of waivers and other incentives even including interest incentives.
“So, if somebody is going to be given a concessional interest rate, they pay the normal interest, carry out the transaction, and then they get a rebate.
“The fiscal policy and tax reform committee is very careful about that and what you have advised today will be taken as important input into our work.”
The Senate suspended plenary on Tuesday to allow members to sit at the committees to hear the defence of MDAs on their budget proposals.