The newly established Policy Advisory Council (PAC) by President Bola Ahmed Tinubu has proposed the merger of the Federal Inland Revenue Service (FIRS), Nigerian Customs Service (NCS), and the Nigerian Maritime Administration and Safety Agency (NIMASA) into the Nigerian Revenue Service.
The members of the (PAC), who include Senator Tokunbo Abiru (chair), Dr. Yemi Cardoso, Sumaila Zubairu, and Dr. Doris Anite, recommended the declaration of a state of emergency on revenue generation in the country and that merging the agencies will improve the efficiency of all direct and indirect taxes, and levies’ collection by the government.
The PAC, which is the National Economy Sub-Committee, recommended that the merger of the revenue agencies with NIMASA should be legalized with the enactment of an Emergency Economic Reform Bill, which will grant the President special powers to supervise the economic reform agenda and support the new administration’s drive towards sustainable and inclusive growth of the economy.
The Council also outlined the removal of fuel subsidy, sale or concession of select government assets, transition to a transparent and unified foreign exchange rate system, deepening tax collection, and optimization of operating expenditure to reduce cost, as targets the President should vigorously pursue in order to record tangible achievements within his first 100 days in office.
The report, which focuses on fiscal and monetary policies, industry, trade, and capital market reforms, indicated that the latest changes in the Central Bank of Nigeria (CBN) and temporary increases in fiscal circuit breakers such as debt limits would help the country to achieve N1 trillion Gross Domestic Product (GDP) growth and over 50 million jobs for citizens in eight years.
This is even as the PAC’s members projected that ongoing reforms in the apex bank had the potential of raising Nigeria’s foreign reserves to between $50 billion-$60 billion, with a monthly inflow of at least $6 billion-$8 billion from export earnings and other capital inflows.
According to the Council, this will help the government to achieve N500-N600/$1 exchange rate for the Naira and other benefits to the economy.
On fiscal policies options the new administration should adopt, the Council advised that the Tinubu-led administration should target domestic refining capacity of two million barrels per day (mb/d) in the next eight years, including through modular refineries investments, while creating economic opportunity for the oil-producing communities.
It clarified that government should ramp up production capacity to four million barrels from offshore and onshore assets within four years and grow crude oil revenue and savings into ECA and NSIA as well as “formalize illegal refineries and encourage modular refineries to create economic opportunity for the host communities.
In addition, the PAC also proposed one-off Personal Income Tax (PIT) reliefs for low-income earners for up to one year as non-cash palliatives to cushion the effect of fuel subsidy removal.
The Council, in its other fiscal recommendations, proposed that government should give “a policy directive that ensures proceeds from the sale of assets to settle existing FGN debt obligations.
The PAC advisory Note further stated: “List shares of strategic and profitable NNPC subsidiaries, privatise, concession or sell down FGN’s stake in corporate assets to partners and other investors (possibly with a buyback option) to generate liquidity in the short to medium terms (focus on sub-optimal assets e.g., NNPCL refineries).
“Leverage blockchain to create and provide access to a Government land registry and regionalise and concession the power transmission grid.”
On the lingering controversy over the deadline set by the past administration on legality of the old banknotes, the PAC members proposed the extension of old naira circulation till December 2024 in order to resolve the cash shortage situation, if required.
They proposed: “Extend the December 31st, 2023 deadline to December 31st, 2024 (if required), and bring in new notes through the deposit money banks by 5% monthly and take out the old notes through the deposit money banks by the same 5% to solve cash shortage.”
