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“Nigeria loses N8trn yearly to tax incentives and waivers” is a recent report that shows a huge hemorrhaging of tangible resources that could be channelled into core developmental areas in the country.
These allegations were brought forward by the immediate past Chairman of the House of Representatives Committee on Public Accounts, Hon. Oluwole Oke, who revealed that only N2 trillion worth of waivers are used to achieve the federal government’s objective.
He further stated that the remaining N6 trillion is lost yearly to companies that abuse the system.
The House of Representatives has resolved to investigate these allegations and get to the bottom of it.
Nigeria loses N8trn yearly to tax incentives and waivers: What Experts Are Saying
According to Mr. Oke, the majority of these abuses come from fiscal items including capital allowances, Investment allowances, and Value Added Tax Exemptions, among others, noting that these gaps have adversely impacted the country’s Tax to-GDP ratio which stands at 10.6%, being one of the lowest in Africa.
Mr. Oke asserted that it is within the scope of the powers of the Federal Government to exercise executive and legislative jurisdiction over items in the Exclusive Legislative List contained in the Second Schedule to the Constitution of the Federal Republic of Nigeria, 1999.
He continued that matters such as taxation of incomes, profits and capital gains, export and imports are exclusively within the control of the Federal Government.
The lawmaker mentioned that while it is evident that the Federal Government has good intentions, these practices are having adverse effects on the public purse.
He stated that the biggest contributors to this issue are companies that have been abusing the tax waivers and incentives that they have been granted.
He then proceeded to admonish the government to address the issue as soon as possible to avoid catastrophic consequences such as economic crisis, recession and depression.
What is a Tax Incentive?
This is part of a government’s taxation policy designed to encourage a particular economic activity by lowering tax payments.
It is usually used to increase employment, increase the number of capital transfers, attract investment, and bring development to areas that need it.
Tax incentive, if properly executed, can boost the overall economic welfare touching on the different sectors of a national life especially with trade and commerce. However, if formulated, enacted and implemented poorly, it can cost the government significant revenue with no benefit whatsoever, denying it the fund it needed to deliver it’s core mandate to the masses.
What is Tax Exemption?
This is the lowering or elimination of an individual or a company’s obligation to pay tax. It may give complete or partial relief from taxes.
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