The Federal Government has rejected calls from some critics for the reduction of taxes as part of the palliatives to reduce the adverse socio-economic effect of the coronavirus outbreak.
This was disclosed by the Minister for Finance, Budget and National Planning, Zainab Ahmed, on Tuesday, April 7, 2020, during an interview on a monitored television programme.
The Minister said the government would rather be looking at the option of tax deferral than tax reduction, as the tax deduction might not really have the desired effect.
She said that the corporate organizations and individuals could get tax relief based on their donations towards the relief fund for the COVID-19 pandemic.
During the interview, the Minister said, “It was fortuitous when we did the finance bill in 2019, we were looking at how to strengthen the economy and enhance the growth of small-medium businesses and we made a provision that now allows by law for small businesses to pay no company income tax, so they pay zero tax and the medium-sized businesses paid a reduced tax of 20%’’
‘’This is an action that other countries are taken now, but this is something we had planned not even knowing that there was going to be an economic downturn.
‘’Then I said for the big corporates whose companies’ income tax is at 30%, we are going to be looking at options of deferral, not reduction of taxes, so we could defer their taxes, and also encouraging corporate or even individuals to support the COVID-19 response and any support you provide will be tax-deductible, so it’s also a tax relief.”
Video? Nigeria Minister of Finance, Zainab Shamsuna Ahmed, @ZShamsuna on #TheMorningShow on ARISE?. Interviewed by @charlesaniagolu. The Minister talks on @NigeriaGov's fiscal stimulus measures.@FinMinNigeria | @MBuhari | @cenbank pic.twitter.com/fjekK1Ar8r
— ARISE News Feed (@ARISEtv) April 7, 2020
Going further, Ahmed said that government was engaging various sectors of the economy to find out what they needed to make them function better, as they might require different incentives other than tax reduction.
While answering questions, she said due to the recent economic downturn and low revenue, government had to do a review of the development and agreed to redirect resources to first of all, solve the current health crises occasioned by the coronavirus pandemic, continuous payment of salaries and pensions.
The minister expressed fears that if the trend continues, Nigeria might go into recession in 2020, so to prevent that, government has to take some radical and unusual decisions.
President Muhammadu Buhari, early this year, signed the new Finance Bill that increased VAT rate from 5% to 7.5% with some critical goods being exempted. The bill was meant to help boost government revenue while also protecting the micro, small and medium businesses.
The statement by the minister will definitely dampen the hopes of experts who had called for reduction or even suspension of taxes as some form of relief for households and businesses during this economic downturn and lockdown globally.