Suspension of telecom tax will worsen revenue problems, lead to more borrowing – Akabueze

THE suspension of the proposed excise duty on players in the digital economy, which was announced by the Minister of Communications and Digital Economy, Isa Pantami, would worsen Nigeria’s revenue problems and could lead to increased borrowing, the Director-General, Budget Office of the Federation, Ben Akabueze has warned.

Akabueze expressed his fear on the issue yesterday when he appeared on Arise Television.


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Pantami had announced on Monday, September 5, 2022 that the Federal government had suspended the proposed five per cent excise duty on telecommunications company because of apprehension it could upset the recorded progress in the information and communication technology (ICT) sector.

The proposed duty had already been embedded in the Finance Act of 2020 as a way of widening the Federal Government’s revenue base, the Budget Office DG said.

Akabueze, who said he was unaware of any suspension of the proposed  duty, said its reversal would adversely impact projected revenue for, and deficit in the 2023 budget, and negatively affect the budget’s general implementation.

He asserted that the suspension of the excise duty would lead to a reworking of the 2023-2025 Medium Term Expenditure Framework.

“I don’t know about the suspension. This is a law now. Beyond what I have read in the media, we haven’t been advised in terms of the suspension. For instance, recently the Federal Executive Council (FEC) passed the Medium-Term Expenditure Framework for 2023 -2025.

“The framework that the FEC passed includes projections for this tax. That framework is currently before the National Assembly. If we are formally advised that this is no more applicable, then we will have to rework that Medium Term Expenditure Framework,” he said.

What that meant, he explained, was that projected revenues would decline and deficit would increase, compelling the Federal Government to either cut back on expenditure or increase debt.






     

     

    The 2023-2025 Medium Term Expenditure Framework submitted by the Finance Budget and National Planning was a proposed spending of N19.76 trillion, borrowings of N9.32 trillion, a deficit of N12.42 trillion and a total projected revenue of N8.46 trillion.

    Already, there are concerns of increasing borrowings to fund Nigeria’s budget deficit, a situation that has put Nigeria in dire fiscal distress.

    “Nigeria doesn’t have a strong economy at the moment because its revenue cannot run its economic course. Where we have highly placed government officials sounding discordant tones over government’s policies doesn’t help investor confidence,” an economist, Kalu Aja, said while reacting to the controversial suspension of the proposed five per cent duty.

    Aja stressed that a coordinating Minister of the Economy would be needed for harmony in coordinating Nigeria’s economic programmes and policies.

     

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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