.Insists tax expenditure regime has been mismanaged, abused
Ndubuisi Francis in Abuja
The Centre for Social Justice (CSJ) has declared that the N34 trillion customs duties waiver granted yet-to-be identified beneficiaries in 2025 did not adhere to the procedure provided by the Fiscal Responsibility Act (FRA), insisting that the tax expenditure regime has been mismanaged and abused over the years.
In a statement issued by its Lead Director, Eze Onyekpere, the civil society organisation recalled the recent revelation by the Nigeria Customs Service (NCS), while appearing before the House of Representatives Committee on Finance that it implemented a waiver to the tune of N34 trillion worth of customs duties in the 2025 financial year.
During the session with the parliament, the NCS stated that in accordance with enabling laws, it does not approve waivers but implements the same on the authority of the Minister of Finance.
CSJ said, “The House of Representatives Committee on Finance requested a comprehensive breakdown of the beneficiaries, the legal basis and purpose of the waivers.
“It is imperative to note that customs duty waiver is a subset of tax expenditure and other tax expenditures include all types of tax holidays and exemptions granted to various companies especially, to attract foreign investment in critical sectors.
“A proper account of the overall tax expenditure for 2025 will definitely be in excess of the customs duty waiver figures.”
It recalled that the consolidated revenue accruing to the Federal Government of
Nigeria (FGN) in the 2025 financial year was N28.23 trillion out of a targeted N36.35 trillion.
The organisation stated that the value of the consolidated FGN revenue, when compared with customs duties waiver raises several posers very fundamental to sound fiscal governance and the tenets of fiscal responsibility as stated in the Fiscal Responsibility Act.
It argued the rationale behind the FGN’s action to waive and forfeit more revenue than it retains for an economy running a very high budget deficit.
CSJ further probed, “On a scale of preference, economic wisdom, common sense and rationality, is it more reasonable to retain revenue duly accruing to FGN or to plunge Nigeria into a debt trap? We forfeit and waive revenue that rightfully belongs to us and go cap in hand to creditors?
“By S.29 (1) of the Fiscal Responsibility Act (FRA) provides:
“Any proposed tax expenditure shall be accompanied by an evaluation of its
budgetary and financial implications in the year it becomes effective and in the three
subsequent years, and shall only be approved by the Minister, if it does not adversely impair the revenue estimates in the annual budget or if it is accompanied by countervailing measures during the period mentioned in this subsection through revenue increasing measures such as tax rate raises and expansion of the tax base.”
Noting that the N34 trillion customs duties waiver in 2025 did not follow the procedure provided by the FRA, it queried the evaluation of the budgetary and financial implications.
“Where is the evaluation of its budgetary and financial implication? Was it sent to the National Assembly for approval? Approval by the Minister is contingent on the waivers not adversely impairing the revenue.
“The waivers negatively and adversely impaired the revenue. Where is the documentation of the countervailing measures prepared by the Minister and approved by the National Assembly?
“The Nigerian Tax Policy 2017 indicates that revenue forgone from tax incentives or
concessions should be quantified against expected benefits and reported annually.
Where the benefits cannot be quantified, qualitative factors must be considered.
“Pray, Nigeria has been granting tax waivers over the years, where is the annual reports
quantifying the revenue waivers against accrued (not just expected) benefits?
“In the light of the foregoing, CSJ and reasonable Nigerians are convinced that the tax expenditure regime has been mismanaged and abused. Any law conferring a huge discretion on any public officer to waive humungous revenues while deficits are rising and Nigeria continues the endless borrowing jamboree is not a reasonable law in a democratic
society,” the organisation said.
It, therefore, urged the National Assembly to amend the relevant laws to ensure that all tax expenditure do not exceed ten per cent of the actual revenue for the preceding financial year, adding that the proposed tax expenditures should be laid with the Appropriation Bill before the National Assembly as a schedule to be approved with the budget.
It also called on the National Assembly, through its legislative oversight, to ensure the enforcement of extant provisions of the FRA.
