….lists measures to improve fiscal efficiency
The Manufacturers Association of Nigeria (MAN) has bemoaned the Federal Government’s excessive and multiple taxes imposed on manufacturers in its efforts to boost non-oil revenue for debt repayment, describing the fiscal measure as undesirable for economic growth.
The umbrella body of real sector players in the nation’s economy made its position on the rising taxes on its members known in its just published ‘Q1 2023 Manufacturers CEO Confidence Index (MCCI)’ report titled “Special Focus: MAN at the Receiving End of National Debt Crisis.”
The report linked the multiplicity of taxes being imposed on manufacturers to efforts by the government to repay its surging debt currently estimated at over N77 trillion and flawed the fiscal authorities for creating inclement business environment through indiscriminate taxes imposed on manufacturers.
According to the manufacturers’ group, the risk of a debt service-to-revenue ratio has now exceeded 100%, which could compel the new administration to continue borrowing or hinder vital infrastructure investment with the attendant negative implications for the nation’s economic recovery drive and manufacturing sector’s growth.
The report underscores the adverse effects of escalating public debt on the manufacturing sector, such as the crowding out of private investment due to reduced credit availability and higher lending rates caused by mounting domestic debt, and that servicing external debts in foreign currencies usually cause high demand for foreign exchange and lower exchange rate for the naira.
The group also highlighted the connection between surging public debt and dwindling foreign investment and capital inflow which is capable of worsening the current FX scarcity just as it pointed out that government’s increasing borrowing for recurrent expenses will reduce funds for critical infrastructure projects necessary for manufacturing sector growth.
Noting that Nigeria’s core challenge is not revenue generation but mismanagement of generated revenues, leading to financial discrepancies, the MAN lamented that substantial taxes were being collected in the informal sector without proper remittance by the collecting agencies.
On how the government could effectively manage the nation’s surging public debt, the manufacturers’ group canvassed the need to broaden the tax base, enforce fiscal transparency, rehabilitate the local refineries and investigate financial irregularities with a view to plugging leakages.
In addition, it also advised the government on coordinating creditors, prioritizing transparency and debt management, optimizing resource allocation, strengthening monitoring mechanisms, fortifying anti-corruption efforts, ensuring efficient government spending, capitalizing on states’ revenue potentials, and diversifying income streams through strategic sectoral development to improve fiscal efficiency.
