Tax evasion: FG to raise $1bn, urges defaulters to regularise payment

As the Federal Government of Nigeria continues to source for how to finance the N2.36 billion deficit in the 2017 budget, Finance Minister, Kemi Adeosun, has said that the fiscal authority hopes to raise at least $1 billion from a scheme that will give tax evaders a chance to make payments retrospectively.

The government says it has created a ‘window’ that would allow tax defaulters to pay so as to avoid sanctions

The 2017 budget, which has a record expenditure outlay of N7.44 trillion, has been giving Nigerians concern over the strategy the Federal Government seeks to finance the deficit in the budget.

But the finance ministry disclosed that the scheme would be launched on Thursday, June 29, 2017, so as to give evaders immunity from prosecution, penalty charges and interest, if they “regularise their tax status” between July 1 and December 31, 2017.

It said tax evaders, who delayed participation until after December 31 would be liable for interest on overdue tax balances.

International asset tracers and investigative specialists have been appointed to assist the government in tracing assets held by Nigerians, the ministry said in an emailed statement.

According to her, “Anticipated funds to be raised are at least US$1 billion, which will reduce Nigeria’s borrowing needs, allow investment in vital infrastructure and spur development.”

The country’s record 7.44 trillion-naira ($22.95 billion) 2017 budget, signed into law last week, seeks to increase capital expenditure to stimulate growth.

Economists have long criticised the low levels of tax in Africa’s most populous country; and in March. the government enunciated plans to increase its overall tax to Gross Domestic Product (GDP) ratio to 15 per cent by 2020 from the current six per cent.

The government has previously announced plans to increase a luxury goods tax to 15 per cent from five per cent.

But a breakdown of this year budget showed that N434.41 billion would be spent on statutory transfers, N1.66 trillion on debt servicing, N177.46 to retire certain maturing bonds, N2.99 trillion on non-debts recurrent, and N2.36 trillion on capital expenditure.

To finance this, the Federal Government said it expected to generate N2.12 trillion from oil revenue and N2.96 trillion from non-oil avenues.

About 11 per cent of the expected revenues, which is N558.8 billion is to come from recovered loots and misappropriated funds.

This brings the total projected revenue to N5.08 trillion, leaving a deficit of N2.36 trillion.

The budget deficit is to be financed mainly through borrowings; as N2.32 trillion is expected to be sourced externally, while N1.25 trillion will be sourced locally.

However, Financial Expert, Mr. Akintunde Sowunmi, has expressed concerned over the implication of borrowing N1.25 trillion from local sources, especially the banking sector, arguing in that it would create encumbrances for private businesses to also get credit.

In view of this, he advised government to lean more toward foreign borrowings, adding that it was easier for them to get foreign loans than private businesses.

“I am concerned that the bulk of the deficit will be financed by internal sources and that will significantly crowd out the private sector.

“Government is a big borrower and banks stand to benefit more by doing business with them, so it affects the private sector.

“We are curious to see the implementation of the 2017 budget, since it is the first budget since the Federal Government inaugurated the Economic Recovery and Growth Plan.

“It will show us how serious indeed the government is in revamping and growing the economy,’’ he said.

Less than a week ago, the Federal Government, through the Debt Management Office (DMO), raised a total of N99.26 billion ($315.11 million) in a five, 10 and 20-year debt at a flat rate of 16.19 per cent at an auction.

According to the debt office, the N99.26 billion realized was less than the intended N140 billion it wanted to raise, as it did not want to pay more for the notes.

The breakdown showed that the DMO sold N4.22 billion of the 2021 paper at 16.19 per cent, compared with 16.30 per cent last month and 30.25 billion naira of the 2027 paper at 16.19 per cent against 16.29 per cent in May.

The largest economy is currently battling to exit the second year of a recession brought on by low oil prices, while working seriously in diversifying its revenue away from oil.