President Muhammadu Buhari will today present the 2016 budget to the National Assembly, the main focus being a major shift from oil as the main source of revenue to mining and new taxes targeting the rich.
The Federal Executive Council yesterday approved the final draft of the N6 trillion budget with an unprecedented capital vote of N2 trillion.
The budget is based on an oil bench mark of $38per barrel and a daily crude oil production of 2.5 million barrels per day.
Experts in Economics and the manufacturing sector yesterday urged the government to increase priority for the capital vote.
The Minister of Information and Culture, Lai Mohammed, said while addressing State House correspondents yesterday after an emergency meeting of the Federal Executive Council (FEC) that the council approved a memo presented by the Minister of Budget and National Planning, Senator Udoma Udo Udoma, seeking the approval of the 2016 budget proposal.
The Minister later told State House correspondents that a memo was also presented by the Minister of Justice and Attorney-General of the Federation Abubakar Malami for a review of the current taxation law.
He said some inadequacies noticed in the current tax regime had been exploited by individuals and corporate organisations to evade tax; the situation which, he said, had led to loss of government's revenue.
"We have noticed some inadequacies in the current tax regime, and that these inadequacies have been exploited by both individuals and corporate organisations to evade tax which has led to loss of revenue to the government. The review aims at plugging these loopholes.
"On the taxation law, it was a memo presented by the Attorney-General, and it is basically looking at the policies behind the taxation laws to see whether any of them needs to be strengthened. It is a review to see whether there are any gaps".
Also speaking on the issue, Budget and National Planning Minister Udoma Udo Udoma said the review of the taxation law would not be aimed at those who could not afford it.
Udoma said that the review would be aimed more at the affluent rather than the poor.
"It is a little premature to talk about what exactly the reviews are. I am sure they would be consulting widely, and definitely, any review will not be aimed at those who cannot afford it. It will be aimed at more at the affluent rather than the poor", he said.
In an exclusive interview with Daily Trust, a lecturer of the Department of Economics at the Kaduna State University, Dr. Aminu Usman, said the 30 percent capital expenditure proposed for the budget was too low considering the huge infrastructure gap in the country.
He noted that the capital expenditure had always been a challenge for the country.
"Capital expenditure has been slightly above 20 percent and it is not even implemented adequately", he said.
He noted that the appropriate thing should have been 70 percent capital expenditure and 30 percent recurrent expenditure. On the oil benchmark, he said given the scenario unfolding in the international oil market, the $38 per barrel upon which the budget is predicated is "not reasonable."
He said $35 per barrel would be more realistic than $38 per barrel because of the fluctuations in the price hovering between $34 and $35 in recent times.
He said a holistic look at the budget proposals showed that there were some challenges that needed to be addressed as about 40 percent of the budget would be funded from government revenue while about 40 percent would be funded from borrowing, both local and foreign.
On the dwindling federal revenue as against government's expansionist budget of N6 trillion, Dr. Usman said the budget is not too ambitious since the government had factored in the Treasury Single Account (TSA) which had brought all individual projects being executed by Ministries, Department and Agencies (MDAs) under one umbrella.
Also, the Executive Director of the African Centre for Leadership, Strategy and Development (Centre LSD), Dr. Otive Igbuzor, suggested an increase in the capital expenditure in the 2016 budget to 40 percent as against the 30 percent being proposed.
He said in an exclusive interview with Daily Trust in Abuja that the increase in the capital aspect of the budget from about 22 percent in 2015 budget to 30 percent in 2016 is not "phenomenal."
"I think it is good that the capital expenditure is increasing from about 22 percent this year to 30 percent but I don't think the increase is phenomenal. The government once promised us that they would make 40 percent capital expenditure. I think that should be better. I want to ask the National Assembly to look at the budget very well and explore the possibility of raising the capital expenditure to 40 percent," he said.
Speaking on the oil benchmark of $38 per barrel on which the budget is predicated, Dr. Igbuzor described it as "tricky."
"There are projections that it may be lower than $38 per barrel. If you look at the experiences of benchmarking that we have had, only in a few years, like last year, do you see that the benchmark for the budget will be higher than the prevailing price? That tells you clearly that there is a challenge. So, government needs to watch out," he said.
He added that the 2.2m barrels of crude oil per day projected in next year's budget is "doable" if the problem of oil theft is handled properly.
"There are several estimates of the amount of oil theft every day, ranging from 105 to 400 barrels per day. All we need to do is to focus and ensure that the right production is done and oil theft is reduced," he said.
On the 2016 expansionist budget, Dr. Otive Igbuzor commended the federal government for increasing the 2016 budget to N6trn from slightly over the N4trn budgeted this year.
"It shows that government is able to make plans for the expansionist budget in the face of falling oil prices. It shows that the revenue drive of the government is on course. The blockages of loopholes and recovery of loot will be utilized for the implementation of the expansionist budget," he said.
Source: All Africa News
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