Economist Advises FG To Target Assets To Finance 2022 Budget
The Chief Executive Officer (CEO) of Economic Associate, Ayo Teriba, has advised the Federal Government to target lucrative assets in the country to shore up its revenue generation to finance the 2022 budget.
Teriba, who is the Chairman, Advocacy Group of the Lagos Chamber of Commerce and Industry (LCCI) frowned at government’s excessive introduction of excise duties for local manufacturers and the 7.5per cent Value Added Tax (VAT) for the populace.
He explained in Lagos that Nigeria could not take pride in continuing to issue a portfolio that was 100 per cent junk bond at this period.
According to him, that was the penalty that the country was paying on N4.6 trillion debt costs out of the N6 trillion loans borrowed to finance its national budget.
He said the only way for Nigeria’s revenue problem to be solved is by trying to get more revenue from assets and not by trying to get revenue from Gross Domestic Product (GDP), which is in recession.
Teriba recalled that in 2020, the country’s debt profile was N4trillion, while the revenue was N3.99 trillion.
He said: “So you decided to tax sugar, to tax alcohol, tax tobacco and only to turn around and surrender it to debt costs. So Nigeria needs to learn lessons on how to get revenue, because that revenue is there, is just that, we won’t gets it by trying to tax an economy that is in recession. You won’t get it by trying to tax a populace that is struggling to recover from devaluation or trying to deal with the ripples of a pandemic.
“So tax is embedded even though, most countries have suspended tax holiday and they are subsidising even if they have to borrow. So there is no way running away from borrowing. You can get revenue but, it will be long term tax revenue and you must borrow and you better learnt how to borrow.
“Your debt cost is going to be eliminated by linking debt to assets and issuing only investment grade debts and also tell the Debt Management Office (DMO) not to issue any debt instrument unless, it is investment grade because it will eliminate debt cost, it will unlock new revenue and that is, what the world calls financialisation, that is a strategy or trying to get revenue from assets, rather than, trying to get revenue from producing and trading, which is in the world that we are in today is more or less a dead end.
“Nigeria cannot take pride in continue to issue a portfolio that is 100 per cent junk bond that is the penalty that we are paying in N4.6 trillion debt costs out of the N6 trillion is penalty for not doing our due diligence to put quality in our debt portfolio. None of our debt portfolios are linked to any assets and we are so rich in assets. All our debt instruments are promissory notes as if we don’t have assets. So the point is to conclude that national treasury interest is falling into low revenue and this is because we are still trying to get government revenue only from GDP.
“We have assets that we can get a lot of revenues from, especially in the country’s real estate space, that are idles, that are undeveloped. Am not really saying sell the real estate buildings, you can redeveloped them for lease and get government’s revenue from them as China is doing, as Brazil is doing, as United States is doing and as United Kingdom is doing.
“We have a government that likes to get tax revenue to do urban renewal. But that tax revenue is not forthcoming. However, in the urban space, your cities, your transit routes, your transit bus, they are assets in their own right. I do not know any other country in the world who don’t make fortunes from their city centers. You can’t even drive to the city centers anymore. You enter some city centers in the world you think you are in the malls.”
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