• Experts demand centralisation of tax collection process
The Federal Government accumulated a total of N44.062 trillion in fiscal deficits from 1999 to 2023, records compiled by Statisense, a data analytic platform, disclosed.
According to the document, the Olusegun Obasanjo administration incurred a total of N1.549 trillion. Out of the figure, N21 billion was sourced from the foreign market while domestic debt stood at N1.53 trillion.
Debts under President Shehu Musa Yar’Adua were N974 billion with foreign debts at N29.8 billion and domestic debts at N944.7 billion.
Under Goodluck Jonathan, the total debt incurred was N5.22 trillion. The foreign debt stood at N148.4 billion while domestic debt was N5.08 trillion, Statisense pointed out.
The Muhammadu Buhari government took the deficit to an all-time N36.031 trillion. About N4.45 trillion constituted the foreign debts while domestic debt was N31.58 trillion.
The government claims it has embarked on deficit financing to stimulate the economy.
Indeed, deficit spending helps to stimulate economic growth during periods of recession. By increasing government expenditures, money is injected into the economy, which boosts consumer spending and business activity.
Governments may also use deficit budgets to fund important infrastructure projects such as building roads, bridges, and public facilities, which have long-term economic benefits. But experts have argued that most of the recent borrowing went into recurrent expenditure, hence the borrowing contributed to the economic setback.
An oil and gas expert, Henry Adigun, believes that the impact of sustained budget deficits has affected the revenue potential negatively.
“The government has shortfalls in revenue since it has to pay debts with a lot of its revenue. Nigeria currently pays about 85 cents of every dollar it earns to service debt.
“That has led to the inability to reinvest in the economy and consequently inflation and lack of growth. The result is the high rate of unemployment and lack of critical enablers of growth,” he said.
He submitted that the huge budget deficits may be responsible for Nigeria’s inability to properly defend the naira.
Chief Executive Officer of Dairy Hills Limited, Kelvin Emmanuel, disclosed that Nigeria has a consolidated debt of $171 billion, which went up 611 per cent within the last eight years.
According to him, the primary culprit responsible for the spike in debt was the revenue-to-GDP ratio of 7.9 percent, which is one of the lowest in sub-Saharan Africa.
He added: “Abuse of the Central Bank overdrafts or what is typically called Ways and Means result of which saw the government paying 21 percent interest on $53 billion before the National Assembly agreed to sterilize the debt.”
To get some reprieve, Emmanuel urged the Tinubu government to focus on the harmonisation of taxes, centralisation of revenue collection functions of 62 ministries, departments and agencies (MDAs) as a tool to reduce collection rates and increase collections.
“The government also has a fight against under-assessment by rogue officials at the Federal Inland Revenue Service (FIRS), while at the same time ensuring that it implements the Stephen Oronsaye Report to reduce the cost of governance,” he said.
