Partner and West Africa Tax Lead at Price Waterhouse Cooper, PwC Nigeria, Taiwo Oyedele has revealed that the country can generate between N3-4 trillion naira if the country does away with some subsidies.
Oyedele, in a chat with CNBC Africa and monitored by The New Diplomat explained that this has become imperative as the country’s economy battles a double threat from the coronavirus pandemic and dwindling oil prices which have badly affected its revenue. He posited that it is time for the country to look at how she can cope with the strain on revenue targets and explore other various options available to the Government.
“Government needs to look at areas where we seem to be wasting revenue, the subsidy is the biggest one. We have a subsidy on petroleum products, particularly petrol. The government says we have removed subsidy but they are not paying attention to the fact that we have 3 components of subsidy. There is under-recovery, which is what has been removed; there is the foreign exchange subsidy that has not been removed and there is also the tax subsidy that has not been removed.
Additionally, if you include the taxes that should be on petroleum products like Value Added Tax, VAT, and Excise duty, then the government should be looking at a revenue of about N2 trillion.
Then, you have the subsidy on electricity tariff which is about N1 trillion. The government needs to find a way to remove that also. You also need to find out how to harmonize the tax waivers and incentives that are not really adding value to the economy” he said.
He also added that the foreign exchange subsidy can be removed by harmonizing the rate at which everyone gets the foreign currency.
This will mean not giving concessionary interest rates to petroleum products importers, but rather the market-driven rates.
The PwC boss said that by the time you put together the revenue that can be raised by doing away with these subsidies, one can easily raise between N3 trillion and N4 trillion in revenue, even with the biting economy. A tidy sum to help with the challenges faced by the country.
