Proper Coordination Needed For Nigerian COVID-19 Tax and Fiscal Policy Stimulus- Yomi Olugbenro

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Thursday, April 16, 2020 /11.00PM / Bukola Akinyele for WebTV / Header Image Credit:  @YomiOlugbenro

 

Speaking on the COVID-19 pandemic, Tax and other Fiscal Stimulus Measures in Nigeria, Mr. Yomi Olugbenro, Partner and West African Tax Leader, Deloitte Nigeria emphasised the need for a coordinated policy framework in the country to ensure that policies align with addressing prevailing socio-economic challenges. 

 

In his opinion the Federal Government is taking on tax at the national and sub-national levels in a modest manner. The Tax expert said, the crises is in  both health and medical emergency and the slowly emerging major economic challenges the country will have to face.

 

He argued that at the medical level it was important to resolve how to contain the health impact and the medical crises of COVID-19 as the country attempts to protect as many lives as possible.


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Olugbenro was optimistic that on the medical side, Nigeria could deal with the pandemic and upgrade medical infrastructure in a way to make sure that people can go back to work.  

 

He noted that the announcement made so far about taxes has centred on administrative measures that would help taxpayers manage their compliance obligations during the period.

 

The accountant further explained that some of the measures related to shifting deadlines for returns and payments of federal taxes and that of a couple of sub-nationals, the Federal Inland Revenue Service (FIRS) have come up to announce postponement of filing deadlines by 5 days.

 

The tax expert believed that to soften  the impact of the COVID-19 lockdown on corporations and individuals, one of the measures would to ease the inconvenience of tax reporting would be to give time extensions for filing and  returns so that businesses could take two or three months in planning their returns.

 

Olugbenro said that the Finance Act 2020 that kicked in at the beginning of the year made provision for some measure of relief  for micro and small businesses ,the reliefs included  tax exemptions and tax reductions. He said, If all this were put together then some measure of support for businesses were in place but a lot more needs to be done.


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He said, the first phase of the crises management strategy was to  devote time and energy on the medical crises and health challenges and then policy could  move on to the other phase.

 

 The Deloitte partner said that, the most critical thing at this point was coordination of public policy and the effective intervention by government in providing palliatives.


 He insisted that a lot of coordination would  be required in order for the country to channel its limited resources into the best productive uses. The accountant believed that the country needed to strengthen current containment measures in dealing with medical emergencies.

 

On his part Mr. Boason Omofaye, MD/CEO African Frontier Reports shared his views on the recent World Economic Outlook Report of the International Monetary Fund (IMF) and the Central Bank of Nigeria (CBN) Governors statement on the interventionist monetary policy measures in 2020.

 

According to Omofaye, the 27-page CBN document has shown that the central bank has tried to midwife a coordinated economic approach to economic growth by both the private and public sector actors.

 

He explained that, the private sector had its fears or apprehensions in dealing with the government but what was important was that the CBN in helping the government to achieve it growth and fiscal goals was brokering collaboration between both sectors.. He cited the N15trillion target for an infrastructure company plc [Infraco] which was an idea muted by the CBN for transport and infrastructural finance in Nigeria in terms of  logistics, to help manufacturers, small and medium enterprises to get on and use the instruments of the capital market to help raise N1.5trillion at first instance, to spur further future fund raise to develop domestic infrastructure.

 

Omofaye noted that Nigeria's infrastructural funding gap was huge. The idea was use the private sector to come in and build credibility and integrity into the fund raise and management process.

 

Omofaye noted that whether the citizens of the country like it or not the Nigerian government would continue to borrow to build infrastructure  but if the private sector would be allowed to structure both debt and equity packages under Infraco Plc and the entity is listed on the Nigeria Stock Exchange [NSE] and the FMDQOTC Exchange  then a market-determined and private-sectored nurtured infrastructural fund could be of immense benefit in closing the country's existing infrastructural funding gap.

 

The financial analyst noted that the country could not do much with taxes now but beyond tax the finance act creates other opportunities for easing the tax burden on citizens and the relief pre-dated worries about a COVID-19 economy. Omofaye noted that the proposal to reverse the existing value added tax (VAT) from 7.55 to 5% was not practical.  He admitted that the government would need to be more creative to support large, medium , and small-scale corporate entities and individuals as a way to move the economy forward after dealing with the COVID-19 challenge.

 

Speaking on the issue of internet use and ICT generally, Omofaye said additional pressure on digital networks while everybody worked from home could put severe pressure on existing communication infrastructure and he called on the government to restructure the ICT architecture in Nigeria in order to  operate provide a robust framework for remote work life going forward.


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The financial analyst also noted that whether the country got help from the International Monetary Fund[ IMF], World Bank, or from the Islamic Development Bank (IsDB), it would still need to face internal issues of economic structure and management. He insisted that the country needs to develop and grow a home-grown domestic economic strategy and implementation framework  to develop the country's industrial base, grow its manufacturing with an eye on productivity as the economy employs millions of more Nigerians.


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