The House of Representatives has resolved to investigate the allegations of abuse of tax incentives, tax breaks and tax waivers by public institutions and companies benefitting from such incentives, leading to loss of N14 trillion revenue.
This was sequel to the adoption of a motion moved by Hon. Oluwole Oke at plenary on Thursday when he argued that Nigeria loses about N8 trillion annually to tax incentives and waivers and N6 trillion to companies that abuse the system.
Moving the motion, Oke said the Federal Government of Nigeria exercise monetary and fiscal controls over the economy to stabilise both micro and macro-economic conditions and fundamentals over items in the exclusive legislative list contained in the second schedule to the Constitution of the Federal Republic of Nigeria, 1999.
He said some of the tools available to monetary and fiscal policy authorities to tinker with the economy and stimulate economic activities in some sectors of the economy are tax waivers, tax breaks, tax exemptions and tax incentives.
“Recall historically that the Federal Government had issued policy documents in line with its fiscal goals and strategy, for example, the annual issuance for the Fiscal Policy Measures by the Ministry of Finance, the periodic issuance of the Value Added Tax Modification Order, among others. Some of these policy interventions had been effective in the past in achieving part of its objectives.
“Furthermore, available data also show that while the Federal Government has good intentions, these practices have and continue to create a major black hold in the purse of the Government of the Federation. These losses are occasioned and driven primarily by abuses by Companies that have been granted tax-based waivers and incentives.
“Again note that based on available data, Nigeria continues to lose about N8 trillion annually to tax incentives and waivers. About N6 trillion is lost to companies that abuse the system, while N2 trillion worth of waivers achieve the objective of the Federal Government.
“Most of the abuses arising from fiscal items like capital allowances, Investment Allowances, Pioneer Status Incentives, Free Trade Zone exemptions, Value Added Tax Exemptions, etc,” he said.
Oke expressed concern that if urgent steps are not taken to investigate the situations, Nigeria may not only be hanging on a fiscal cliff but heading to Venezuela, which is a situation “where a country has huge resources but is in deep economic crisis, recession and depression.”
Adopting the motion, the House resolved to setup an Ad-hoc committee to investigate the allegations and report back within four weeks for further legislative action.
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