Buhari assents to N21.83trn 2023 budget despite NASS changes, as Finance Bill 2022 waits

President Muhammadu Buhari has signed into law the 2023 Budget of N21.83 trillion and the 2022 Supplementary Appropriation Bill, three months after he presented the documents before a joint session of the National Assembly in October, 2022.

This is also as the Finance Bill 2022 has continued to be delayed as it was not signed into law by President Buhari, who explained that it was due to due to ‘some of the changes made by the National Assembly…which need to be reviewed.’

Buhari, who said he decided to sign the bills despite misgivings over decisions taken by the National Assembly, explained that Buhari it was to enable its implementation commence without delay, considering the imminent transition process to another democratically elected government.

Buhari had picked holes in the decision by the National Assembly to introduce new projects into the 2023 budget proposal for which it has appropriated N770.72 billion, in addition to increasing the provisions made by Ministries, Departments and Agencies (MDAs) by N58.55 billion.’

The President signed the bills into law at the State House in Abuja, Tuesday, in the presence of the Senate President, Ahmad Lawan and the Speaker of the House of Representatives, Femi Gbajabiamila.

The 2023 budget is the last to be prepared by the present administration as it winds up.

While signing the budget, Buhari said the aggregate expenditures of N21.83 trillion were increased by N1.32 trillion over the initial proposal of N20.51 trillion expenditures by the executive.

On the supplementary appropriation bill, the president said that the 2022 Supplementary Appropriation Act would enable the administration to respond to the havoc caused by the recent nationwide floods on infrastructure and agriculture sectors.

According to him, the Minister of Finance, Budget and National Planning will subsequently provide more details of the approved budget and the supporting 2022 Finance Act.

“We have examined the changes made by the National Assembly to the 2023 Executive Budget proposal.

“The amended fiscal framework for 2023 as approved by the National Assembly shows additional revenues of N765.79 billion, and an unfunded deficit of N553.46 billion.

“It is clear that the National Assembly and the executive need to capture some of the proposed additional revenue sources in the fiscal framework. This must be rectified.

“I have also noted that the National Assembly introduced new projects into the 2023 budget proposal for which it has appropriated N770.72 billion.

“The National Assembly also increased the provisions made by Ministries, Departments and Agencies (MDAs) by N58.55 billion.’’

He, however, directed the Minister of Finance, Budget and National Planning to engage with the Legislature to revisit some of the changes made to the Executive budget proposal.

Buhari expressed the hope that the National Assembly would cooperate with the Executive arm of Government in this regard.

The president urged the National Assembly to reconsider its position on his proposal to securitise the Federal Government’s outstanding Ways and Means balance at the Central Bank of Nigeria (CBN).

“As I stated, the balance has accumulated over several years and represents funding provided by the CBN as lender of last resort to the government.

“To enable it meet obligations to lenders, as well as cover budgetary shortfalls in projected revenues and or borrowings.

“I have no intention to fetter the right of the National Assembly to interrogate the composition of this balance, which can still be done even after granting the requested approval.

“Failure to grant the securitisation approval will, however, cost the government about N1.8 trillion in additional interest in 2023, given the differential between the applicable interest rates which is currently MPR plus three per cent and the negotiated interest rate of nine per cent and a 40-year repayment period on the securitised debt of the Ways and Means.’’

To ensure more effective implementation of the 2022 capital Budget, Buhari thanked the National Assembly for approving his request for an extension of its validity date to March 31.

The president directed the Ministry of Finance, Budget and National Planning to work toward early release of the 2023 capital votes to enable MDAs commence the implementation of their capital projects in good time.

According to him, this is to support efforts to deliver key projects and public services as well as improve the living conditions of Nigerians.

He reiterated that the 2023 Budget was developed to promote fiscal sustainability, macroeconomic stability and ensure smooth transition to the incoming administration, while adding that it was also designed to promote social inclusion and strengthen the resilience of the economy.

He said that adequate provisions had been made in the Budget for the successful conduct of the forthcoming general elections and the transition programme.

On achieving revenue targets for the budget, the president directed MDAs and Government Owned Enterprises (GOEs) to intensify their revenue mobilisation efforts, including ensuring that all taxable organisations and individuals pay taxes due.

The president said relevant Agencies must sustain current efforts toward the realisation of crude oil production and export targets to achieve the laudable objectives of the 2023 Budget.

The president thanked the Senate President, the Speaker of the House of Representatives, and all the leaders and members of the National Assembly for the expeditious consideration and passage of the Appropriation Bill.

He also recognised the roles played by the Ministers of Finance, Budget and National Planning, the Budget Office of the Federation and the Senior Special Assistants to the President (Senate and House of Representatives).

Buhari also lauded Office of the Chief of Staff, as well as all who worked tirelessly and sacrificed so much toward producing the 2023 Appropriation Act, just as he expressed the belief that the next administration would sustain the early presentation of the annual appropriation bill to the National Assembly to ensure its passage before the beginning of the fiscal year.

Meanwhile, the Finance Bill 2022, which is a major component of the 2023 budget was not signed into law by President Buhari during Tuesday’s signing of the budget, as he expressed regret that its review as passed by the National Assembly had yet to be finalised.

It would be recalled that President Buhari had earlier transmitted the Finance Bill 2022 to the National Assembly.

The proposal is billed for passage, along with the 2022 Supplementary Appropriation Bill and 2023 Appropriation Bill.

However, by Tuesday, the Nationa; Assembly had yet to resume plenary after the New Year holidays to complete deliberations on the bill.

“This is because some of the changes made by the National Assembly need to be reviewed by the relevant agencies of government. I urge that this should be done speedily to enable me to assent it into law,’’ Buhari said.

The Finance Bill 2022 which contains major recommendations made by the National Assembly seeks to, among others, amend the Capital Gains Tax Act, Companies Income Tax Act, Federal Inland Revenue Service (Establishment) Act, Personal Income Tax Act.

Others are the Stamp Duties Act, Tertiary Education Trust Fund (Establishment) Act, Value Added Tax Act, Insurance Act, Nigerian Police Trust Fund (Establishment) Act, National Agency for Science and Engineering Infrastructure Act, Finance Control and Management Act, Fiscal responsibility Act; and for Related Matters.

Similarly, the Federal Government seeks to suspend tax relief and rebates being granted to companies established in locations lacking public infrastructure and are providing their electricity, water and other amenities.

In the bill, the Federal Government is seeking 34 amendments to 10 existing Acts, namely Capital Gains Tax Act; Companies Income Tax Act; Customs, Excise Tariff, Etc (Consolation) Act; Federal Revenue Service Establishment Act; Personal Income Tax; Petroleum Profits Tax Act; Stamp Duties Act; Value Added Tax Act; Corrupt Practices and Other Related Offences Act; and Public Procurement Act.

The current Section 32 of the CGT Act, which provides for Reconstruction Investment Allowance, partly reads, ‘(1).

“Where a company has incurred an expenditure on plant and equipment, there shall be allowed to that company an investment allowance as provided in Subsection (2) of this section and shall be in addition to an initial allowance under the Second Schedule of this Act.”

However, in its new move, the government has prayed the National Assembly to delete the section.

“Without prejudice to any pre-existing rights relating to any qualifying capital expenditure incurred or qualifying capital assets acquired on or before (31st December 2022), Section 32 of the Companies Income Tax Act is hereby deleted, provided that a company that has incurred capital expenditure on plant and equipment on or before the effective date of this repeal shall continue to enjoy the allowance under this section until it is fully utilised.”

Similarly, the government wants Section 34, which provides for Rural Investment Allowance, deleted from the Act.

According to the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, “the bill seeks to amend relevant taxes, excises and duty statutes in line with the macroeconomic policy reforms of the Federal Government and to amend and make further provisions in specific laws in connection with the public financial management of the Federation.”

She also said that the bill is aimed at ensuring that all sectors of the economy are brought under the tax nets, especially sectors that have evolved over the years such as the cryptocurrecy and gaming sectors.

For instance, under the Tax Equity pillar, all sectors of the economy would be brought into the tax net including Capital Gains Tax from digital assets, Cable Undertakings, Lottery, and Gaming Business.

According to the Minister, the proposed Finance Bill 2022 is anchored on five fundamental policy drivers: Tax Equity; Climate Change; Job Creation / Economic Growth; Tax Incentives Reform; and Revenue Generation / Tax Administration

Digital Tax considerations: The bill contains provisions that clarify the basis for the taxation of Cryptocurrency and other Digital Assets in line with the Government’s policy thrust of enhancing the cross-border and international taxation of growing e-commerce with emerging markets.

The digital tax considerations align with the tax equity pillar of the bill and include taxing capital gains from digital assets like lottery, gaming (sports betting), and Cable Undertaking.

Climate Change Taxes: The proposed bill also includes a provision for climate change which is classified under the Similarly, under the Climate Change and Green Growth pillar of the bill.

The plan is to create incentives for the natural gas sector and discourage gas flaring.

There are also incentives under the pillar of Tax Incentives’ Reforms, that provide for new deductions for Research and Development, and Investment Tax Credits; Reconstruction Investment Allowance; Rural Investment Allowance; Incomes in Convertible Currencies to be exempt, among others.

Also, the bill contains an amendment under Chargeable Assets stating that “subject to any exceptions provided by this Act, all forms of property shall be assets for the purposes of this Act, whether situated in Nigeria or not, including Options, debts, digital assets and incorporeal property generally.”