•1 per cent of GDP given out as waivers, tax incentives –Finance Minister
From Ndubuisi Orji, Abuja
The Nigeria Customs Service ( NCS) has said that the country lost a total of N1. 8 trillion to Import Duty Exemption Certificate( IDEC) in 2023.
The Comptroller General, NCS, Wale Adeniyi, disclosed this, yesterday, at an interactive session between the House of Representatives Committee on Appropriation and Government Owned Enterprises ( GEO).
Adeniyi, who was responding to questions from lawmakers, said though the money lost to waivers, could have shored up government revenue in the 2023 fiscal year, said there several benefits that could be derived from IDEC, if handled well.
This is as Minister of Finance and Coordinating Minister of the Economy, Wale Edun, said the waives and tax incentives represents one per cent of the country’s Gross Domestic Product (GDP).
According to him, “ As far as our figures are concerned in 2023, we lost a whopping N1.8 trillion naira to Import Duty Exemption Certificate (IDEC). So, if we add to the revenue figures I mentioned, we should have been home and dry as at November in terms of realizing our target for the year.
“But you know when we are addressing the issue of IDEC, I am always of the view, we should not throw away the baby and the bath water because there are a number of benefits that we could derive from it. I have seen this well executed in some developing countries
“I know where the customs administration implements IDEC successfully and the benefits are so many in terms of regenerating the economy in terms of creating employment and even in terms of even tax and in terms of ensuring that we keep our companies in production.
When you give them these kinds of incentives, it gives them the motivation to add some value to the economy.”
Adeniyi explained that though the revenue target of the service for the 2024 fiscal year is N5 trillion, it could raise N6trillion if the environment is right.
The Customs boss, while explaining that goods in the ports that are yet to be cleared represents some sort revenue for the government, said there is an estimated N500 billion revenue on some vehicles outside the ports.
He said : “Waivers is one of those areas which if we get it right, this kind of revenue figures we are talking about for 2024 is achievable. If we can give up N1.8 trillion in one year, that is a very huge number.
“ I believe that if we review the environment under which those waivers are given, if we monitor them properly to ensure the economy gets value for those revenue that were given up, I am sure we would be in a better position in 2024.
“ The goods in the ports that are not cleared represents some kind of revenue that is sitting the ports for us. One of the first things I did as far back as July, when I took over effectively was that we looked into our system and we started raising questions about goods that have been landing in the ports and for which declarations have not been made…
“Even outside the ports, there are second had vehicles that are being imported in defiance of the law closing the borders and we see a lot of revenue sitting in this kind of vehicles. We are already seeking the appropriate approvals from the Minster for us to be able subject all these vehicles for assessment so we collect revenue. We estimate over 500 billion naira revenue attributed to these particular vehicles that are outside the ports.
“In terms of the possibility of N6 trillion, I agree very much with you this is possible. We are targeting N5 trillion, but it is not impossible for us to make N6 trillion if some of the issues around the operating environment are talked about.
“I would just mention a few of them. The concession that we talked about, if we are able to review to the concessions that we are going to grant in 2024, we might get there.
“Also for excise duty, you will remember that at the beginning of July, excise on single use plastic products was suspended. So we believe that if this suspension is lifted we are believing that something in the region of 300 billion naira can be realized from single use plastic alone.”
Edun, while fielding questions from lawmakers, noted “that about one percent of the GDP of this country is given out in waivers, tax, incentives, import duty waivers and so on and so forth. “ He added that government expenditure needs serious analysis to ensure that “items that were relevant years ago or even given out years ago are not now still being given where they are not required and where they are not adding value.”
The minister explained that One of the particular areas is that incentives are often given out upfront and with the technology that is available today, we are looking to move to a system of rebates.”
Furthermore, he stated that while the Federal Government is working towards increasing revenue from taxation from 9 to 18 percent, it would not necessarily translate to increase in taxes. Edun explained that the focus of the government was an efficient tax administration.
According to him, “I would say there is no plan for increase in tax rates as such. There is a plan for increasing the revenue from taxation. It is to increase tax returns, tax revenue as a percentage of GDP from around nine percent within three years to 18 percent, which is closer to the African average.
“So, the emphasis is on collections, not on increasing the tax rates. It is increasing the efficiency of tax administration particularly collection.”
The committee chairman, Abubakar Bichi, in speech at the session, noted that though the 2024 budget estimates is well thought out, the proposals cannot be achieved without revenue.
Consequently, Bichi urged the GOEs to step up their efforts to increase government revenue, without it affecting the citizens negatively.
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