FG mustn’t increase taxes as suggested by IMF-NECA

The Nigeria Employers’ Consultative Association (NECA) has taken a swipe at the suggestion that the Federal Government should increase taxes, arguing that any further rise in taxation will lead to a negative impact on households, individuals, and businesses.

NECA’s Director-General, Adewale-Smatt Oyerinde, who stated this in a statement on Sunday, stated that private sector is already overwhelmed by multiple taxes, adding that the imposition of additional taxes on services will make the business community more vulnerable with a trade-off on growth and job creation.

The International Monetary Fund (IMF) had recently called on the government to reduce its debt by focusing on increasing the tax basket and compliance as a means of generating revenue to cut borrowing.

IMF, in its latest fiscal monitor, titled, ‘On the Path To Policy Normalisation’, noted that Nigeria’s debt was projected to continue to rise and urged the government to remove fuel subsidies and direct them to health and education.

Reacting to recommendations by the multilateral firm, Oyerinde said the move to increase taxes in order to reduce borrowing as suggested by the IMF, would only lead to disaster for an economy struggling to stay afloat.

“For a private sector already overwhelmed by multiple taxes, the imposition of additional taxes on services will make the business community more vulnerable with a trade-off on growth and job creation,” Oyerinde said.

“More taxes, of course, will weaken the purchasing power of individuals and stifle consumption, with attendant consequences for social cohesion.

“It may defeat any attempt to widen the tax net as taxpayers would consider tax avoidance measures.

“There will be massive capital flight, and the drive for direct foreign investment could be defeated.”

Oyerinde further said the government should consider widening its tax net as the association had posited on many occasions and at various fora.

He also said the association was in support of the IMF’s recommendation to the government to consider widening its fiscal net, as it is the way to go.

“In addition, one of the problems governments at all levels in Nigeria have is the rising cost of governance,” he added.

“If the cost of governance can be addressed decisively, it has the tendency to reduce borrowing since recurrent expenditure will automatically decrease.

Speaking on the subsidy removal palliative from the World Bank, Oyerinde said the $800 million fund was “not necessary”.

Rather, he urged the government to give attention to fixing the refineries and making them operational in the coming months before the removal of petrol subsidy.

“Already, experts and the polity at large have frowned against the loan facility and have proposed definitive approaches including fixing the refineries,” he said.

“Also, investigate, without delay, the subsidy regime with the view of exposing the alleged corruption associated with it; this should not be a difficult thing for the government to do.”