…Says N34Trn NCS’ Duties Waiver In 2025 Is Unlawful
The Centre for Social Justice (CSJ) , a leading civil advocacy group in Nigeria, has flawed the current tax expenditure waivers for Ministries, Departments and Agencies (MDAs) and charged the National Assembly to urgently consider the amendment of the relevant provisions of the tax legislations with a view to frontally tackling the abuses in current fiscal regime.
The Centre, in a statement signed by its Lead Director, Eze Onyekpere, on Friday specifically hinged its call on the recent revelation by the Nigeria Customs Service (NCS), while appearing before the House of Representatives Committee on Finance that it implemented the waive of N34 trillion worth of customs duties in the 2025 financial year.
It recalled that the NCS stated that in accordance with enabling laws, they did not approve waivers, but implemented the same on the authority of the Minister of Finance and that the House of Representative Committee on Finance requested a comprehensive breakdown of the beneficiaries, the legal basis and purpose of the waivers.
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The Lead Director stated that it had become imperative to note that customs duty waiver is a subset of tax expenditure and other tax expenditures include all types of tax holidays and exemptions granted to various companies, especially to attract foreign investment in critical sectors.
While noting that a proper account of the overall tax expenditure for 2025 will definitely be in excess of the customs duty waiver figures, CSJ further recalled that the consolidated revenue accruing to the Federal Government of Nigeria in the 2025 financial year was N28.23trillion out of a targeted N36.35trillion.
According to the civil advocacy group, the value of the consolidated FGN revenue when compared with customs duties waiver raises several posers very fundamental to sound fiscal governance and the tenets of fiscal responsibility as stated in the Fiscal Responsibility Act.
The Centre clarified: “Pray, is it reasonable in an economy running a very high budget deficit for FGN to waive and forfeit more revenue than it retains on a scale of preference, economic wisdom, common sense and rationality, is it more reasonable to retain revenue duly accruing to FGN or to plunge Nigeria into a debt trap? We forfeit and waive revenue that rightfully belongs to us and go cap in hand to creditors?
“By S.29 (1) of the Fiscal Responsibility Act (FRA) provides: “Any proposed tax expenditure shall be accompanied by an evaluation of its budgetary and financial implications in the year it becomes effective and in the three subsequent years, and shall only be approved by the Minister, if it does not adversely impair the revenue estimates in the annual budget or if it is accompanied by countervailing measures during the period mentioned in this subsection through revenue increasing measures such as tax rate raises and expansion of the tax base ”.
“The N34trillion customs duties waiver in 2025 did not follow the procedure provided by the FRA.
“Where is the evaluation of its budgetary and financial implication? Was it sent to the National Assembly for approval? Approval by the Minister is contingent on the waivers not adversely impairing the revenue. The waivers negatively and adversely impaired the revenue.
“Where is the documentation of the countervailing measures prepared by the Minister and approved by the National Assembly?”, the CSJ added.
It further stated that the Nigerian Tax Policy 2017 indicated that revenue forgone from tax incentives or concessions should be quantified against expected benefits and reported annually. Where the benefits cannot be quantified, qualitative factors must be considered. Pray, Nigeria has been granting tax waivers over the years, where is the annual reports quantifying the revenue waivers against accrued (not just expected) benefits?
The Centre maintained that in the light of the foregoing, it and reasonable Nigerians were convinced that the tax expenditure regime has been mismanaged and abused, stressing that any law conferring a huge discretion on any public officer to waive humungous revenues while deficits are rising and Nigeria continues the endless borrowing jamboree is not a reasonable law in a democratic society.
To address the fiscal challenge, CSJ recommended that the National Assembly should amend the relevant laws to ensure that all tax expenditure do not exceed ten percent of the actual revenue for the preceding financial year.
In addition, it advised the Legislature that the proposed tax expenditures should be laid with the Appropriation Bill before the National Assembly as a schedule to be approved with the budget.
In its conclusive recommendation, the Centre charged the National Assembly through its legislative oversight, to ensure the enforcement of extant provisions of the FRA.
