Taiwo Hassan 
Following President Bola Tinubu’s insistence that it is not possible for the country to service debt with 90 percent of its revenue, a former President of Lagos Chamber of Commerce and Industry (LCCI), Mr. Babatunde Ruwase, has urged the Ministry of Finance, Budget, and National Planning and its agencies to strengthen the country’s revenue base by widening the tax net to other critical sectors of the economy.
Ruwase, in a chat with New Telegraph, said that reviewing tax incentives in other critical sectors of the economy was apt and necessary to improve compliance. Specifically, he mentioned that taxes on carbon and other forms of pollution may also be used to raise the country’s gross domestic product (GDP) at this period that the country’s revenue generation is declining.
In this sense, the former LCCI president stated that the National Council on Climate Change’s (NCCC) proposal to introduce a carbon tax policy was a good step, but that progressive taxation principles that safeguard the underprivileged and low-income should be the guiding principles for any modifications to the tax code in the country.
According to him, the Ministry of Finance, Budget, and National Planning and its agencies must step up on revenue generation, but this time around widen its tax net beyond the manufacturing sector and other real sectors of the economy, which, according to him, have been under the radar of the Federal Government.
He said: “As of 2022, Nigeria’s debt reached an all-time high of N77 trillion. Over the past decade, Nigeria has experienced a notable surge in its debt levels. The debt to GDP ratio has more than doubled from 17.7 percent to 37.3 percent in 2022, and over 80 percent of the country’s revenue is being used to settle or service debt.
“Spending over 80 percent on debt servicing leaves about 20 percent of the country’s revenue to be thinly spread across other sectors such as health, education, security, road and infrastructure, agriculture, social welfare, etc.
“While many academic research may argue that increased borrowing increases GDP and household income, this is obviously not the case for Nigeria as it is clear from statistics and the faces of the masses that increasing government debt and loans have amounted to increasing poverty, which can only be attributed to the poor fiscal management in Nigeria.”
According to him, there are many factors fueling Nigeria’s debt crisis, the main one being fiscal mismanagement. Ruwase added: “The Nigerian government lacks fiscal discipline. The Fiscal Responsibility Act of 2007 clearly stated that the government at all levels might borrow only for ‘capital investment’ and ‘human development.’
“This Act has been flouted over the years and efforts to amend some ambiguities in the Act has not succeeded over the year. For instance, the Act prescribes the inclusion of ‘borrowing for important reforms of major national importance.’ This is ambiguous and most often abused. The terminology is vague and increases the government’s borrowing power.”
The former LCCI president further said: “The relevance of the Fiscal Responsibility Act is sabotaged by the lack of strict sanctions to enforce compliance. The Fiscal Responsibility Commission, just like other oversight agencies in Nigeria lacks sanction power and is poorly supported. “The existing fiscal structure in Nigeria somewhat promotes the lack of accountability, transparency and corruption.
“For instance, government audit reports from the Auditor General’s office are never made for public usage or access. Even the National Assembly and Presidency over the years have ignored this lack of transparency in a public report. “How do we fight corruption without public audit reports?
The Fiscal Responsibility Act also requires that borrowed funds be managed in a separate account to allow for proper monitoring and a clean spell out of what the debts are used for. “However, the norm has been to add the loans to the overall consolidated funds, without a clear public report on what capital projects are funded by the loans.”
Hitherto, he added: “It is sad that the only place where detailed progress reports of projects funded by loans, are the creditor websites, and never the Nigerian government or relevant MDAs public reports.”
