Stakeholders applaud Tinubu’s 18% tax-to-GDP target for limiting government indebtedness.

Some interested parties have lauded President Bola Tinubu for appointing Mr. Taiwo Oyedele to head the Presidential Committee on Fiscal Policy and Tax Reforms.
The comments were given in individual talks with reporters in Abuja.

Tinubu kicked off the group on Monday; its members are experts from both the public and private sectors who will work together to improve tax law, fiscal policy, tax harmonisation, and revenue management.

Economist Dr. Tope Fasua commended the president for moving forward with necessary adjustments to Nigeria’s tax overhaul. He said it was in the government’s best interest to increase revenue as much as possible and cut spending as little as possible.

To ensure the long-term health of the economy, Fasua advocated for a series of measures to be taken by each state to increase revenue generation. He pleaded with the business community to back the government’s revenue-raising initiatives.

He commented, “The private sector responds whenever the government proposes a tax rise, no matter how minor.” The private sector has transformed into an enemy of the government.
He also claims that the government of Nigeria needs to prioritise its budget.

As the president recently put it, “We have a debt problem, a revenue problem, and an expenditure problem.” While Nigeria’s debt to GDP is very low, he insists that the country “start spending wisely and generating more revenues.”

The CEO of an international consulting and investment firm, Dr. Ayo Abina, has suggested that Nigeria may generate enough cash to meet government spending without resorting to borrowing.

The President of Guinea-Bissau has also shown his support for Nigeria.

He made these claims in the press: “By increasing the tax-to-GDP ratio to 15%, Nigeria can earn an additional $53 billion without raising taxes, and it can save $4 billion by combating oil theft.”
There was also an intervention by the International Monetary Fund (IMF), which urged the Federal Government to broaden the country’s revenue base.

Research firm Pol Eco Analytics applauded the president for moving through with necessary adjustments to Nigeria’s tax overhaul. Senior researcher at Pol Eco Analytics, Mr. Adefolarin Olamilekan, promised that the committee would identify a permanent fix for the wasteful spending of more than sixty-two government agencies.
Olamilekan added that it will dispel myths about government need for MDAs to pay taxes.

This is a courageous and patriotic policy stance that deserves the support of all Nigerians, he said. As the New York Times put it, “this is a laudable move to address problems of disarticulated tax regimes and official negligence, which exacerbate the case of tax evasion and non-compliance in Nigeria.”

IMF Nigeria Office Resident Representative Ari Aisen recently urged the government to dramatically reduce dependency on borrowing to fund expenditures during a virtual conference on the Nigerian debt position.

Aisen argues that revenue and expenditure are where Nigeria’s attention should be directed in order to resolve the country’s debt issues. He blamed the federal government’s spending habits for escalating the debt situation.
To what extent can government spending be decreased? That should be the main focus of inquiry.

He emphasised that people should not continue to spend more than they make since it is unsustainable, saying, “It’s all about fiscal responsibility.” Governments, according to Aisen, should prioritise using tax money to finance government operations. He explained, “That is the independence and autonomy that we would like to see our member countries rely on.”

Vahyala Kwaga, an analyst at the Nigerian digital firm BudgIT, which uses technology to promote social activism, recently urged his countrymen to pay attention to the fiscal policies of their state governors.

According to the author, “The federal system allows the federal government to provide funds to the states.” When these sums are distributed to individual states, it’s important to know how wisely they are spent. “The transparency and accountability problem we have in the use of funds is extremely problematic at the level of the states,” he said.

As the Federal government of Nigeria works to increase the country’s revenue base through tax and other fiscal changes, Nigerians hope that borrowing will soon no longer play a significant role in paying the country’s budgets.
As of the end of 2022, Nigeria’s total national debt was N46.25 trillion (around 103.11 billion dollars).

The Debt Management Office (DMO) of Nigeria reports that the public debt stock of the country is made up of the domestic and foreign obligations of the Federal Government of Nigeria and the sub-national governments.
The Debt Management Office (DMO), which was established to coordinate the management of the federal government’s debts, has also stressed the importance of increasing tax revenue to reduce the government’s reliance on borrowing. Director General Patience Oniha claims that for decades, Nigeria has operated with deficit budgets, requiring it to borrow money from both domestic and international lenders.

Borrowing money from both inside and outside the country to pay for budget deficits is “the primary reason for the increase in debt stock and debt servicing.” One way to reduce budget deficits is to increase revenue, while another is to consolidate spending and eliminate waste and leaks. I’m curious about Nigeria’s GDP. Revenue generation in Nigeria is low when compared to other countries.

“With a revenue-to-GDP ratio of 6.3%, Nigeria was ranked 194 out of 196 countries covered in the World Bank Economic Outlook for 2020,” she said. She said that a healthy revenue stream would reduce the need for significant new borrowing and the debt service to income ratio. Countries develop and occasionally borrow to make up for revenue deficiencies, but ultimately, “revenue generation is the way to go.” “Nigeria has run budget deficits for decades; it is past time to transition to a balanced budget, if not a budget surplus,” she continued.

She claims that the rise in the public debt stock is due in part to increasing borrowing by the federal government and state and local governments to pay budget shortfalls and implement projects.
“The issuance of promissory notes by the Federal Government to settle some liabilities also contributed to the growth in the debt stock,” she said.