Oyedele Sounds Alarm: N6 Trillion Annual Tax Waivers Threaten Revenue Generation

The Chairman of the Presidential Committee on Tax and Fiscal Policy Reform, Taiwo Oyedele, voiced concern about the annual loss of up to N6 trillion in tax waivers in Nigeria, equivalent to the country’s yearly revenue. Oyedele disclosed this during an appearance on the “Sunrise Daily” program on InfoStride News, dated November 24, 2023.

Confirming the Senate’s recently quoted figure for tax waivers, Oyedele emphasized the lack of measurement regarding the economic impact of these substantial waivers. He expressed dismay, stating that the amount given away annually is significant compared to the country’s revenue base, which was just around N6 trillion generated by the FIRS in 2021.

Oyedele underscored the economic imprudence of not assessing the impact of these waivers on the economy, emphasizing that if the country had a more substantial revenue base, the impact might be more tolerable. However, given the current scenario, it appears as if the country is wasting money it can ill afford to lose.

The Chairman acknowledged the necessity of exemptions from value-added tax (VAT) on essential items such as basic food and medical expenses. He justified these exemptions by citing instances where he recommended the suspension of VAT on diesel, import duties, and compressed natural gas (CNG). Oyedele stressed the importance of such interventions for the welfare of the people and the potential social impact, even if the immediate economic effects are challenging to quantify.

Oyedele delved into the various types of waivers, including income tax exemptions, duty and VAT waivers for businesses, and Free Trade Zone Area privileges. He highlighted the need for strategic interventions to prevent societal unrest and emphasized that governance should prioritize the well-being of the people.

The tax reform committee, chaired by Oyedele, is actively considering a new incentive regime. They are scrutinizing existing waivers and incentives, evaluating their impact on the economy and society. Oyedele explained that the committee is asking critical questions about the eligibility and effectiveness of these incentives if designed today. They are exploring ways to target incentives, measure their impact, and incorporate “sunset provisions” into the legislation. This approach aims to prevent the perpetuation of ineffective policies and ensure that incentives align with the country’s economic circumstances.

In conclusion, Oyedele emphasized the committee’s commitment to using data and stakeholder engagement to design incentives that address the current economic needs of Nigeria. By incorporating sunset clauses and regularly reviewing the relevance of incentives, the committee aims to avoid repeating historical mistakes of prolonged financial losses due to ill-designed policies.