From Isaac Anumihe, Abuja
Following the obvious decrease in federal funding for critical economic sectors, Civil Society Legislative Advocacy Centre (CISLAC) has called on the Federal Government to implement a tax policy that will make wealthy Nigerians and organisations to pay more taxes.
Speaking with newsmen in Abuja, Executive Director of CISLAC, Auwal Ibrahim Musa, remarked that the economic strain the country is facing is due to the substantial allocation of its revenue towards debt servicing.
“Implementing a net wealth tax or wealth tax policy can significantly boost revenue from high net-worth individuals and organisations” it suggested.
Low revenue, he said, has affected allocations to critical sectors like education, poverty alleviation and health.
According to him there has been a budgetary decline in these critical sectors from 5.97 per cent in 2012 to a mere 3.3 per cent in 2019.
“The 2021 fiscal year saw a budget of N13.6 trillion, of which only N514 billion, or 3.7 per cent, was allocated to health. 2022 witnessed a slight increase to 4.3 per cent, and the highest allocation recently has been 5.7 per cent in the 2023 budget.
“In the last administration (2015-2023) only N6.47 trillion was allocated to the education sector in seven years. The highest allocation to education was N745 billion (8.4 per cent) out of the N8.9 trillion 2019 budget. Following the COVID-19 pandemic and the resultant debt crisis, the education budget has consistently dropped from 6.5 per cent to 5.7 per cent and 5.4 per cent of the 2020, 2021 and 2022 budgets, respectively” he said
While the President Bola Ahmed Tinubu administration is praising itself for allocating more funding to social services in its 2024 budget, the country will spend six times more on servicing debts than on building new schools and hospitals in 2024.
To this effect, only 7.9 per cent, 5 per cent and 4 per cent were allocated to education; healthcare; and social development and poverty reduction, respectively.
“It is also instructive to note that as Nigeria runs a dollar-denominated economy, so it may be more ideal to assess budgetary allocations to social services in dollar terms. A comparative analysis of the budgetary allocations to just education based on the exchange rate assumptions of the country’s 2023 and 2024 budgets show that the education expenditure budget has dropped by 36 per cent between 2023 and 2024 from $56 billion to $36 billion.
“In its N28 trillion 2024 budget, the pattern of bloated recurrent spending new borrowings and unsustainable debt servicing costs still persist. Debt service is allotted N8.25 trillion and the president ambitiously projects debt servicing at 45 per cent of total income while it currently sits at 98 per cent, as the World Bank projects 160 per cent by 2027.
“Acritical analysis of Nigeria’s debt sustainability also reveals concerning figures. The debt-to-Gross Domestic Products (GDP) ratio stands at 45.4 per cent surpassing the self-imposed limit of 40 per cent. Furthermore, the debt servicing-to-revenue ratio has reached 73.5 per cent, significantly higher than the recommended 50 per cent threshold” he said.