Senate wants excess crude funds saved for 25 years

[TGD]

TWO days after its Committee on Information and Communication stopped the Executive arm of government from withdrawing monies from the Excess Crude Account, the Senate yesterday proposed that the accruals to the account be saved for 25 years.

Last Monday, the panel's chairman, Ayogu Eze, who described the existence of the account and its operation as alien to the Nigerian Constitution, directed that no further drawings be made on the account until the Sovereign Wealth Bill is passed.

Eze had said the Senate would ensure that the money being shared by the three tiers of government was re-directed to the execution of the 2011 budget.

And yesterday, the Senate initiated the process to change the use of the revenue accruing to the Excess Crude Account into a stabilisation fund that will enable the Federal Government keep the economy afloat when there is a turmoil in the international oil market.

The Upper Chamber also moved yesterday to provide stiffer penalty for tax evasion in the country.

Leading the debate on the Executive bill titled: "A Bill for an Act to Establish the Nigerian Sovereign Investment Authority," the Senate Leader, Teslim Folarin, said the agency, if established, would build a saving base for future generations of Nigeria, enhance development of the infrastructural sector and assist fiscal stability in certain circumstances.

He said that the agency being sought by the bill will receive, manage and invest in "a diversified portfolio of medium and long term investments for the benefit of future generations of Nigerians, a portfolio of the revenue of the federal, state and local councils to prepare for the eventual depletion of Nigeria's hydrocarbon resources."

Folarin stressed that will be done "in conjunction with other investors for the development of critical infrastructure in Nigeria that will attract and sustain foreign investment, economic diversification, growth and job creation."

According to the bill, "the agency will in exceptional circumstances set out in the Act, utilise certain liquid assets in the stabilisation fund of the authority to supplement other available stabilisation funds to temporarily sustain duly budgeted public expenditure in the interest of macro-economic stability in Nigeria as a whole."

Listing the benefits of the bill, Folarin said it would ensure that the present and future generations of Nigeria would have a country they could call theirs, reduce overbearing dependence on oil, stabilise the value of Nigerian currency and create jobs for the teeming population.

In his contribution, Senator Olorunnimbe  Mamora noted that it would be a way of saving for the rainy days. He added that other countries in the world use such window to stabilise their economies and urged his colleagues to support the bill. In addition, Mamora said the agency, if established, would offer Nigeria an opportunity to invest outside the country.

Senator Ewa Henshaw said the agency would protect the national budget against volatility in the oil market. He suggested that such funds should be allowed for about 25 years before being utilised.

Senator Anyim Ude observed that with the way the three tiers of government rushed to share the money in the Excess Crude Account, the bill would ensure proper use of the resources accruing to it. Senator Nicholas Ugbane said no country in the world needed such law than Nigeria and urged that the bill should be expeditiously passed. He noted that Nigeria has been behaving like a prodigal son and an end should be put to that through the planned law.

After the senators had unanimously agreed that the bill should be referred to the Committee on Finance for further action, the Deputy Senate President, Ike Ekweremadu, who presided at the session, assured that it would be passed in record time, adding "we need to preserve earnings so that this generation and future ones would benefit from the resources that God has given this country."

Also yesterday, the chamber proposed stiffer sanctions for tax evaders.

Folarin, who led the debate on "A Bill to Amend the Personal Income Tax Act CAP.8. LFN 2004 and for Matters Connected Therewith,'' said the bill proposed that anybody engaged in banking in "Nigeria shall prepare a return at the end of each month and the details of new customers of the bank and failure to adhere to this, such a person will be liable, on conviction, to a fine of N500,000 in the case of a corporate body and N50,000 in the case of an individual.''

In the extant law, it is N5,000 and N500 for body corporate and individual in that order.

However, in the ensuing debate, the lawmakers agreed that the penalties were too mild given the sensitive role that taxation plays in the economy.

Folarin further said that the bill "makes it a serious offence for any person or a corporate body who or which, being obliged to deduct tax fails to deduct or remit the deducted amount within the stipulated period to the relevant authorities.

The bill also makes it mandatory for every employer to file a return with the relevant tax authority of all emoluments paid to its employees not later than January 31 of every year, and any employer who contravenes its provision will be liable to a penalty of N500,000 in the case of a corporate body and N50,000 in the case of an individual.

While contributing to the debate, all the senators who spoke were in agreement that the penalties recommended were to too mild and would instead encourage tax evasion.

Source: Senate wants excess crude funds saved for 25 years