NESG picks holes in 2021 Finance Act

Despite the perceived benefits of the Finance Act, the Nigeria Economic Summit Group (NESG) has said that the Act poses an important policy dilemma that may be burdensome for individuals and businesses in the country.

NESG board member, Nnanna Ude, made this observation yesterday, during a virtual roundtable organised by the group to assess the likely impact of the 2021 Finance Act on households, firms, sub-sectors and the macro-economy at large.

Ude, who noted that the 2021 Finance Act is expected to consolidate the achievements of the previous Acts in accelerating non-oil revenue generation in Nigeria, said: “Under limited fiscal space, how much tax revenue can government raise to the extent that tax measures do not have a deleterious impact on households and does not stifle investment and economic growth?

“There are expected trade-offs emanating from the 2021 Finance Act. On one hand, the Act contains tax measures and tax administration changes that can help the Federal Government raise more non-oil tax revenues and realise fiscal sustainability. However, on the other hand, the Act introduces some tax increases that may be burdensome for individuals and businesses.”

According to him, unraveling the dilemma will require an evidence-based assessment of the impact of the tax measures as presented in the 2021 Finance Act. This he said was in accordance with the tradition of evidence-based advocacy at the NESG.

He said that the roundtable will engage relevant stakeholders to assess the likely impact of the 2021 Finance Act on households, firms, sub-Sectors, and the macro-economy at large.

His words: “This roundtable was designed to assess the impact of the tax measures presented in the 2021 Finance Act and address the effects of the Act coupled with its likely micro and macro impact on the economy.”

“The Finance Acts enacted in 2019, 2020 and 2021 have become an emerging fiscal tradition in Nigeria. The primary objective is to progressively reform the fiscal environment and enhance non-oil revenue while supporting the implementation of Nigeria’s annual budgets.

“It is our hope that today’s public-private dialogue will help to facilitate the involvement of key stakeholders from the public and private sectors to assess the micro and economy-wide impact of the 2021 Finance Act, identify the key bottlenecks to its implementation, and articulate an action plan that can help policymakers in designing subsequent Finance Acts.”

On his part, President, Manufacturers Association of Nigeria (MAN), Mansur Ahmed who regretted that there was no effort to capture those outside the tax net, called for more engagement between the private and public sector to achieve set goals.
Ahmed also urged the government to expand existing capacity and help current operators to progress.