By Peter Egwuatu
The Chairman of Presidential Fiscal Policy and Tax Reforms Committee, FPTRC, Taiwo Oyedele, yesterday, stated that the Federal Government reforms have been yielding positive results noting that without the reforms there would have been more poverty in the country.
Speaking at the Executive Summit on Nigeria’s Tax Reforms, organised by the PwC for stakeholders under Nigeria’s new tax era, Oyedele, said the new tax reform regime will begin January 2025 after the harmonisation of the Tax Act with the National Assembly.
He stated: “We’re no longer where we used to be. The reforms have been painful, but they’re beginning to yield positive macro results. Many times when you hear analysts speak, including economists, accountants, politicians, everybody all over the place, what you hear is “is your life better now than it was before?”.
“That’s the wrong question to ask. I’m not here to convince or confuse anyone whether the government is doing well or not, no. That would be condescending for this elite audience. You can make your own judgments. I’m here to only share the facts with you so you can make your own decisions.”
Speaking further after narrating the consequences of the pre tax reforms era, he said: “Today, being factual, from negative trade balance and balance of payment, it is now positive. Not just positive, the numbers are significant. “Official exchange rate is unified, and the margin between the official and parallel rates has been collapsed. We’ve cleared foreign exchange forward of more than $7 billion, and we’ve moved from under $4 billion on a net external reserve to over $20 billion today.
“Budget deficit is declining, and we’re spending more on infrastructure. Tax to GDP ratio moved from under 10% is now 13.5% in two years. Instead of 97% to service debt, it’s now under 50% in two years.
“We no longer print money to spend, rather, we’ve paid down part of the ways and means that the previous administration printed.
“We have market-friendly policies overall than we used to have two, three years ago.
“I’m not saying that all the problems have been solved. No. I’ll be deceiving myself and, therefore, deceiving everybody else. But we’re seeing the macros moving in the right direction. And you need the macros to accomplish the micros. It’s like planting a tree for which you expect fruits. The roots have to go down so that the fruits can come up”.
Oyedele, admitted that the economy is not yet where it should be but it is on track to getting things normalized.
In his words: “What we’re seeing now is the roots going down. I agree we need to accelerate how you transform or translate the macro results into micro outcomes so that when the ordinary person goes to the markets, they can feel the impact. In terms of their purchasing power, they can meet their basic needs. If we didn’t do these reforms, it could have been worse.
“But it’s not all green yet. Like, interest rate is still high. The interest rate environment is not very conducive for legitimate businesses. Every time I see that, I wonder, what legitimate business can anybody do borrowing at 35% and break even. There are not many of those.
“We don’t have decent jobs yet. Governments can be more coordinated and communicate better.
“But Nigeria today without the reforms would have bigger deficits, and more money printed. We will have easily over $10 billion unmet forwards. Tax to GDP ratio will be less than 10%. We’ll be spending over 100% of our revenue to service debts.
You hold money; you will not find Premium Motor Spirit, PMS, to buy. There will be more poverty, and we’ll have more ways and means”.
On capital gain tax, he said: “This reform has exempted individuals from all manners of capital gains. You have to sell more than 150 million shares in the capital market to even think about paying capital gains tax. If you have people that will sell more than 150 million here, majority of Nigerians, they haven’t seen those kind of numbers before”.
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