The Federal Inland Revenue Service (FIRS) has unveiled plans to meet with the Central Bank of Nigeria (CBN) and Ministry of Works this Friday with a view to reviewing about N2.59 trillion tax credit scheme for road repairs and construction in the country.
The Chairman of the federal revenue service, Dr. Zacch Adedeji, during a session with the Senate Committee on Finance, flawed the N2.59 trillion tax credit scheme initiated by the immediate past administration.
The scheme comes under lawmakers’ scrutiny, particularly with the Nigerian National Petroleum Company Limited’s (NNPCL’s) explanation regarding a $3.3 billion loan secured through the CBN to stabilize the Naira at the foreign exchange (FX) market.
During the session led by Senator Sani Musa which sought some clarification on the scheme’s efficacy in addressing the country’s federal road infrastructure, the NNPCL’s Chief Financial Officer, Umoru Ajiya, told the lawmakers that NNPCL had spent about N664 billion on upgrading roads across Nigeria’s six geo-political zones.
This is even as he confirmed that the NNPCL secured the $3.3 billion loan facility’s role in supporting CBN’s efforts to mitigate FX market volatility, with about $2.2 billion accessed, leaving a balance of and $1.05 billion which is expected to be gotten before the end of the month.
However, the FIRS’ boss described the tax credit scheme as “unlawful” and called for for its cancellation, stressing that the FIRS should be primarily involved in tax collection and remittance rather than funding road projects through executive orders.
In addition, Adedeji flawed the operational framework of the tax credit scheme, suggesting that road contract awards and payments should be handled by the Ministry of Works.
He hinted of an upcoming meeting between the FIRS, CBN, and the Ministry of Works to reassess the scheme’s progress and redirect efforts more appropriately.
The FIRS’ boss further clarified: “The Mandate of FIRS lumped with the execution of Tax Credit Scheme for road construction is to access, collect tax and remit it into the federation account and not to appropriate it for any purpose through executive order.
“It is not the duty of FIRS and NNPCL to be paying contractors. The Ministry of Works should be in line with its core mandate to award road contracts and pay for them.
“The scheme serves as a faster way for road reconstruction or rehabilitation across the country but we should stop increasing speed towards the wrong direction.
“As a way of stopping the wrong approach, FIRS and CBN are holding a meeting with the Ministry of Works on Friday this week, where stock would be taken of what has been done through the scheme and thereafter to the right path. We should in a nutshell, not continue on the wrong trajectory”, Adedeji stressed.
Speaking during the session, the Chairman of the Committee, aligned his views with the FIRS Chairman’s, pointing out that the utilization of tax credits for road improvements by NNPCL and FIRS might contradict the 1999 constitution’s stipulations regarding the consolidated revenue fund.
The lawmaker said the committee would be awaiting the outcome of the proposed meeting among the three agencies as it could help in guiding future policies on construction projects’ fiscal incentives in the country.
