House Investigates Allegation of Abuse of Tax Incentives, Waivers by Public Institutions, Companies 

Adedayo Akinwale in Abuja

The House of Representatives has resolved to investigate allegations of abuse of tax incentives and  waivers by public institutions and companies benefiting from tax incentives.

The decision of the House to launch an investigation into the allegations was sequel to the adoption of a motion moved at the plenary yesterday, by Hon. Oluwole Oke.

To this end, the House, “Setup an Ad-hoc committee to investigate the allegations and report back within four weeks for further legislative action.”

Moving the motion, Oke said it was within the ambit of the powers of the federal government to exercise executive and legislative jurisdiction over items in the Exclusive Legislative List contained in the Second Schedule to the Constitution of the Federal Republic of Nigeria, 1999. 

He noted that items like taxation of incomes, profits and capital gains, export and imports are exclusively within the control of the federal government. 

The lawmaker stressed that in line with the above, the federal government  exercises monetary and fiscal controls over the economy to stabilise both micro and macro-economic conditions and fundamentals. 

He explained that some of the tools available to  authorities to tinker with the economy and stimulate economic activities in some sectors of the economy include tax waivers, tax breaks, tax exemptions and tax incentives. 

Oke, said when the government needs to attract investments and activities in a sector of the economy, it grants incentives in that sector;  

He said available data showed that while the government has good intentions, these practices have and continue to create a major black hole in the purse of the government.

The lawmaker pointed out that the losses were occasioned and driven primarily by abuses by companies that have been granted tax-based waivers and incentives.

He said: “Again notes that based on available data, Nigeria continues to lose about N8 trillion annually to tax incentives and waivers. About N6 trillion is lost to companies that abuse the system, while N2 trillion worth of waivers achieve the objective of the federal government.”

Oke, emphasised that most of the abuses arising from fiscal items like capital allowances, investment allowances, pioneer status incentives, free trade zone exemptions, value added tax exemptions, among others.

He stressed that the gaps have negatively affected the tax to-GDP ratio of Nigeria, which stood at 10.6 per cent, being one of the lowest in Africa. 

The lawmaker noted that the  gap created in the revenue profile of the government of the federation had also contributed to the federal government seeking loans, grants and aides to fund the country’s budget deficit. 

He expressed concern that if urgent steps were not taken to investigate the situation, Nigeria might not only be hanging on a fiscal cliff, it might 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.