In a bid to address Nigeria’s escalating debt burden, the Tax Justice and Governance Platforms (TJ&GP) has urged the Federal Government to engage citizens in the oversight of tax waivers granted to multinational corporations and organizations.
This plea was made during the Stakeholders Validation Session of a research report titled ‘Tax Expenditures and Its Implications on Debt Management and Sustainability in Nigeria,’ organized by CISLAC and Christian Aid in Abuja.
The coalition, consisting of prominent organizations such as ActionAid Nigeria, Christian Aid, CDD, IBP, CISLAC, NLC, and Oxfam, emphasized the need for reducing reliance on international loans and strictly adhering to the legal provisions governing concessional loans.
Mr. Isaac Botti, the Coordinator of Social Action Programmes, presented the validated report, highlighting Nigeria’s continuous deficits in revenue over the past five years.
The report revealed alarming statistics, indicating a 45% revenue shortfall in 2018, 2019, and 2023, with 31% and 41% shortfalls in 2020, 2021, and 2022.
Nigeria’s total debt portfolio as of June 2023 reached N87.3 trillion ($113.4 billion), comprising N33.3 trillion ($43.1 billion) in external debt and N54.1 trillion ($70.2 billion) in domestic debt.
The report emphasized the significant increase in external debt since the Paris Debt buy-back deal in 2005/06.
Ways and Means, as of December 2023, stood at N23 trillion, with 39% of Nigeria’s total external debt owed to private creditors.
The report underscored the disparity in interest rates and repayment periods between concessional loans and those from private creditors, with payments to private creditors accounting for 60% of the annual debt servicing cost.
Highlighting the impact on the country’s budget allocation, the report stated that Nigeria currently allocates 80% of its total revenue to debt servicing, resulting in declining allocations to crucial sectors like education and health.
The report called for a review of legal and institutional frameworks related to debt management to enhance transparency and enforcement.
Notably, the TJ&GP experts proposed the establishment of a development-focused Tax Expenditure (TE) policy, comprehensive TE legal frameworks, and guidelines for granting tax incentives.
They urged the National Assembly to close existing loopholes and empower the Fiscal Responsibility Commission to sanction offenders.
Additionally, the coalition recommended the implementation of a net wealth tax policy to boost revenue from affluent individuals and organizations, guided by progressive taxation principles to protect low-income earners and the poor.
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