The Senate has urged the Federal Inland Revenue Service (FIRS) to suspend the Federal Government’s current tax waiver policy.
It suggested that the policy should be replaced with a rebate system because of abuses associated with it.
The Senate also decried the N17 trillion the Federal Government reportedly incurred on tax waivers in the last five years, saying its continuation does not make much economic sense.
A tax rebate is a repayment made to a taxpayer for an excess amount paid in taxes. It happens when the tax paid by a person or a company through payroll deductions or estimated payments exceeds the liability.
One of the new tax waivers granted by the government is the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme.
It came into being via an Executive Order signed by former President Muhammadu Buhari in 2019. Through the scheme, private participants or companies provide funds for the construction/refurbishment projects, especially roads, and in exchange, they (participants) are allowed to recoup the funds provided as a credit against their Income Tax for a period not exceeding 10 years.
The Senate made its position known when the Federal Inland Revenue Service (FIRS) presented its budget for this year to its Committee on Finance in Abuja. FIRS targets N19.4 trillion from taxes during the fiscal year.
During the presentation, the Inland Revenue Service Chairman, Zacch Adedeji, said there should be no fresh N2.7 trillion tax credit planned for road projects in the country by the Nigerian National Petroleum Company Limited (NNPCL).
The Senate Finance Committee chairman, Sani Musa, said it was possible for FIRS to even realise N30 trillion from taxes this year through appropriate measures.
Musa said: “Your projection of N19 trillion as total tax collection for 2024 is good when compared to N11.16 trillion achieved in 2023 but the Senate believes that you can do more even to the tune of N30 trillion if required measures are put in place.
“As impressive and encouraging the performance and projections of FIRS are, this committee and by extension, the Senate, urges you to look at the direction of tax waivers largely being abused with attendant and avoidable losses being incurred yearly.
“Available records show that within the last five years, about N17 trillion has been lost by the country to tax waivers.
“It should be suspended and possibly substituted with a rebate system.”
