How Buhari’s Newly Signed Finance Law Will Affect Nigerians
POLITICS DIGEST – Some experts have identified a lack of infrastructure and enabling environment; transparency and accountability; and effective utilisation of public funds, as the major challenge that will beset the expected gains of the Finance Bill signed into law by President Muhammadu Buhari. There are indications that members of the nation’s economic team have already assembled in Abuja to fine-tune modalities for the takeoff of the new law that is mostly centred on raising revenue for the government.
When The Guardian called some members of the economic team yesterday, they affirmed that they were in a meeting in Abuja.A council member of the Chartered Institute of Taxation of Nigeria, Dr. Titilayo Fowokan, said the signing into law of the finance plan marked another beginning of following a defined pattern to raise revenue by government, adding that even in the military era, such was also used.She, however, was not optimistic about a full realisation of expectations from the enforcement of the new law, citing current economic situations, challenges facing businesses, and government’s unending cases of poor accountability and huge cost of governance.
“Government has a lot to do for businesses to thrive, as a basis for raising enough tax targeted by the new law. Infrastructure is critical, as the country’s facilities are poor. The signing of the law should be supported by improved infrastructure stock and enabling business environment, as the law alone is not enough.
“Still, getting funds from the law is one thing, but transparency and accountability in the management is another. This has remained the crux at public fora in recent times. Transparency in the handling of public funds will boost confidence and compliance by citizens,” she said.A Senior Partner at PwC, Taiwo Oyedele, said the signing of the Finance Bill into law came with provisions designed to promote fiscal equity, support MSMEs and modernise the tax system.
“Given that the bill has just been signed into law, it is important to allow some time before it comes into effect to ensure readiness both on the part of the tax authorities and the taxpayers. Also, there should be a nationwide sensitisation to create awareness for affected stakeholders while seeking feedback on areas for future amendments as implementation takes hold,” he said.A public affairs analyst, Jide Ojo, applauded the coming of the law and expects that increased revenue from the Value Added Tax (VAT) and other amended tax laws will be judiciously used to improve on the national infrastructure.
“I hope there will be genuine support for micro, small, medium and large enterprises, and that the promised tax incentives for investment in infrastructure and capital market will be respected. I also do hope that leakages in government revenues will be blocked and that prompt remittances of VAT, stamp duties and other government revenues will be ensured.”
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According to the Chief Executive Officer, the Nigerian Stock Exchange (NSE), Oscar Onyema, market sentiments would be buoyed by a steady and stable recovery in the domestic economy, alongside continued sustainability in monetary policy.He noted that the signing into law of the Finance Bill 2019, and the implementation of the 2020 budget would have a positive impact on companies’ earnings and consumer spending.
The Head of Research, FSL Securities, Victor Chiazor, said the bill would set the tone for Nigeria’s fiscal policy this year, as it covers quite a number of critical areas, especially the increment in government revenue. He, however, pointed out that the increase in VAT is expected to reduce consumers’ disposable income, which may slightly affect their ability to invest in the capital market.
To the Lead Director of Centre for Social Justice, Eze Onyekpere, the amendments of several tax laws like Petroleum Profit Tax Act (PPT), Customs and Excise Tax Act, Company Income Tax Act (CITA), Personal Income Tax Act, Value Added Tax Act, Stamp Duties Tax Act, and Capital Gains Act, is good for the country.
“In all developed and developing countries, government is funded by taxation, which should be the obligation of every citizen. In the case of Nigeria, oil revenue and its mismanagement led governments in the past to ignore taxation as a major source of revenue.“It is, therefore, beholden on citizens to pay tax, while demanding increased transparency and accountability from the federal, state and local governments. The new tax regime should embolden citizens to fight against fiscal impunity as recently witnessed when the daughter of President Muhammadu Buhari flew a presidential jet to attend her frivolous private social affair,” he said.For the Nigeria Employers’ Consultative Association (NECA), the government should not see the private sector as a “cash cow” in its drive to raise revenue.
The group maintained that the new increment of 7.5 per cent in the Value Added Tax (VAT) would do more harm to the already burdened private sector, and further impoverish the people that President Buhari promised to take out of poverty.The Director-General of NECA, Dr. Timothy Olawale, who said that the president meant well for the country, however, cautioned that it is the common man that would definitely be at the receiving end of the increase in VAT.
Proposing a way out for Nigeria, Olawale canvassed an aggressive taxpayers’ enlightenment and expansion of the tax net to capture more citizens as being posited, adding that less than 40 per cent of Nigerians are tax compliant.The Director-General of Lagos Chambers of Commerce and Industry, Muda Yusuf, who said the bill has a number of favourable provisions for small and medium enterprises, however, added that the VAT increase would impact adversely on businesses from cost pressures perspective.“Margins would be affected, depending on the extent to which additional costs could be passed to consumers. The worry is that we are operating in a high cost environment. We also have the worry about the provision on minimum tax,” he said.
