The Senate yesterday urged the Federal Inland Revenue Service (FIRS) to suspend Federal Government’s current tax waiver policy.
It suggested that the policy should be replaced with a rebate system because of abuses associated with it.
The Senate also decried the N17 trillion the Federal Government reportedly incurred on tax waivers in the last five years, saying its continuation does not make much economic sense.
A tax rebate is a repayment made to a taxpayer for an excess amount paid in taxes. It happens when the tax paid by a person or a company through payroll deductions or estimated payments exceeds the liability.
One of the new tax waivers granted by the government is the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme.
It came into being via an Executive Order signed by former President Muhammadu Buhari in 2019. Through the scheme, private participants or companies provide funds for the construction/refurbishment projects, especially roads and in exchange, they (participants) are allowed to recoup the funds provided as a credit against their c Income Tax for a period not exceeding 10 years.
The Senate made its position known when the Federal Inland Revenue Service (FIRS) presented its budget for this year to its Committee on Finance in Abuja. FIRS targets N19.4 trillion from taxes during the fiscal year.
During the presentation, the Inland Revenue Service Chairman, Zacch Adedeji, said there should be no fresh N2.7 trillion tax credit planned for road projects in the country by the Nigerian National Petroleum Company Limited (NNPCL).
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The Senate Finance Committee chairman, Sani Musa, said it was possible for FIRS to even realise N30 trillion from taxes this year through appropriate measures.
Musa said: “Your projection of N19 trillion as total tax collection for 2024 is good when compared to N11.16 trillion achieved in 2023 but the Senate believes that you can do more even to the tune of N30 trillion if required measures are put in place.
“As impressive and encouraging the performance and projections of FIRS are, this committee and by extension, the Senate, urges you to look at the direction of tax waivers largely being abused with attendant and avoidable losses being incurred yearly.
“Available records show that within the last five years, about N17 trillion has been lost by the country to tax waivers.
Adedeji said that it was imperative for the road projects that the NNPCL got an N2.5 trillion tax credit to be implemented before any fresh demand.
His words: “Regarding tax credit, what I said was that the programme is laudable but that the N2.5 trillion being spent on it by NNPCL should be exhausted before bringing fresh requests.
“N2.7 trillion fresh request being made should not be entertained because all NNPCL’s revenue should not be spent on roads when the Ministry of Works is there.”
Adedeji assured that FIRS in collaboration with a committee set up by President Bola Tinubu would reduce the number of taxes payable in Nigeria from 62 to eight or nine.
He said: “President Tinubu has seen the issue of multiple taxation as a pool of problems that is why he set up the presidential committee on tax reforms and fiscal policy.
“As of today(yesterday) in Nigeria, 62 types of taxes are being collected.
“The sad news is that less than eight out of the entire 62, accounted for 97 percent of the collection.
“We are already consulting and engaging the state governments on it.
“At the end of the day, we won’t have more than eight or nine taxes that the state and Federal Government would be collecting.”
