The House of Representatives has resolved to set up and Ad hoc Committee to investigate alleged abuse of tax incentives, breaks and waivers by public officials and benefiting companies.
This was sequel to a unanimous adoption of a motion by Rep. Oluwole Oke (PDP-Osun) at plenary on Thursday.
Moving the motion earlier, Oke that it is within the ambits of the powers of the Federal Government to exercise executive and legislative jurisdiction over items in the Exclusive Legislative list as contained in the second schedule of the Constitution.
He said that items like taxation of incomes, profits and capital gains, export and imports are exclusively within the control of the Federal Government.
According to him, in line with the above, the Federal Government of Nigeria exercise monetary and fiscal controls over the economy to stabilise both micro and macro-economic conditions and fundamentals.
The lawmaker said that some of the tools available to monetary and fiscal policy authorities to tinker with the economy and stimulate economic activities in some sectors of the economy are tax waivers, tax breaks, tax exemptions and tax incentives.
“Available data also shows that while the Federal Government has good intentions, these practices have and continue to create a major black hold in the purse of the Government of the Federation.
“These losses are occasioned and driven primarily by abuses by companies that have been granted tax-based waivers and incentives.
“Available data, Nigeria continues to lose about eight trillion naira annually to tax incentives and waivers.
“About six trillion is lost to companies that abuse the system, while two trillion naira worth of waivers achieve’ the objective of the Federal Government.
“Most of the abuses arising from fiscal items like capital allowances, Investment Allowances, Pioneer Status Incentives, Free Trade Zone exemptions, Value Added Tax Exemptions, etc.
“These gaps have negatively affected the Nigeria Tax to-GDP ratio of Nigeria, which stands at 10.6 per cent being one of the lowest in Africa.
“The gap created in the revenue profile of the Government of the Federation has also contributed to the Federal Government seeking loans, grants and aides to fund our budget deficit.
“Concerned that if urgent steps are not taken to investigate the situations, Nigeria may not only be hanging on a fiscal cliff, it may fall off the cliff and be heading to Venezuela, which is a situation where a country has huge resources but is in deep economic crisis, recession and depression,” he said.
In his ruling, the Speaker of the house, Tajudeen Abbas mandated the committee (hen constituted) to report back within for weeks for further legislative action.