Tinubu Declares an End to FG’s Reliance on Borrowing
President Bola Tinubu declared on Monday that Nigeria would reduce its dependency on borrowing to fund public spending. He made the vow at the inauguration of the presidential fiscal policy and tax reform commission.
Recall that on July 7, 2023, the President established the committee, which will be chaired by a tax and fiscal policy expert, Taiwo Oyedele.
The group, which includes representatives from both the commercial and public sectors, is in charge of many aspects of tax law reform, fiscal policy planning and coordination, tax harmonization, and revenue management.
President Tinubu said at the inauguration yesterday that the committee was in keeping with his vow to remove all hurdles to economic growth in Nigeria.
He said the country could not continue to tax poverty or production but focus on returns, income and consumption.
He said: “The consequences of the ongoing failure of our tax regime are real and significant. The inability of the government to efficiently raise revenue has led directly to an over-reliance on borrowing to finance public spending.
“A government that cannot properly fund itself will also lack the flexibility or fiscal scope to sensibly manage the economy or respond to external shocks.
“Instead, debt service begins to consume an ever greater portion of the government’s already meagre revenues.
“This traps the economy in a vicious cycle of borrowing simply to service previous debt and leaves almost no scope for socio-economic development.
“As President, I am determined to end this cycle. On the day of my inauguration, I promised that my administration would address all of the issues impeding investment and economic growth in Nigeria.
‘’This promise is why I saw an end to fuel subsidy. It is the reason the Central Bank has called an end to its multiple exchange rate system under my watch.
“It is for the same reason we gather here today (yesterday) to inaugurate the Presidential Committee on Fiscal Policy and Tax Reforms.”
Speaking further, the President said: “Within the scope of its mandate, the committee shall have as its objective the advancement of viable and cost-effective solutions to issues such as the multiplicity of revenue collection agencies, the high cost of revenue administration, the excessive burden of compliance on ordinary taxpayers, the lack of effective coordination between fiscal and other economic policies within and across levels of government, and poor accountability in the utilisation of tax revenues.
“The committee comprises experts from both the private and the public sectors. I have given them a strong mandate, and I expect their report to cover tax reform, fiscal policy design and coordination, harmonisation of taxes, and revenue administration, among other items.
“Our target is to improve Nigeria’s revenue profile while making the business environment more conducive and internationally competitive.
‘’Our aim is to transform the tax system to support sustainable development, while, at the same time, achieving a minimum of 18% Tax-to-GDP ratio within the next three years.
“In order to ensure seamless implementation, the committee shall be empowered, not merely to make recommendations but also to provide practical support to the government in the execution and delivery of the recommended changes.
“The committee is expected to achieve its mandate within a period of one year. They are, in the first instance, expected to deliver a schedule of quick reforms that can be implemented within thirty days.
‘’Critical reform measures should be recommended within six months, and full implementation will take place within one calendar year.”
Tinubu also instructed all government agencies, MDAs, ministries and departments, to fully collaborate with the committee in carrying out its mandate.
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