The changes in the 2021 Finance Act would see boost in the revenue of the federal government by N60 billion, although, it would lead to a hike in tuition fees, thereby, impacting the country’s human capital development.
Tax expert and economic analyst, Mr Taiwo Oyedele, stated this at ‘the Nigerian Economic Outlook 2022’ webinar organised by the Redeemed Christian Church of God’s The Kings Court parish at the weekend.
Oyedele who is the Fiscal Policy Partner and Africa Tax Leader at PwC Nigeria, said, the Finance Act 2020 which has commenced would further degenerate human capital in Nigeria, in the long run.
The Finance Act 2020 amended tax on Tertiary Education Trust Fund from 2 per cent to 2.5 per cent which the tax expert noted that with human capital being a major deficit to Nigeria, tax increase towards education shouldn’t have occurred.
Oyedele said: “I struggle to understand why we are trying to tax educational institution, educational institution, I don’t understand why when every plan that we have speaks to the fact that we need more education not just in terms of the quantity, but the quality and depth of education for us to lead in this new age.
“So, the implications would be that you have increased funds and my estimation is that educational tax will go up by about N60 billion naira in a year, so that we agree is significant, but it means that higher burden for companies that have to pay this. Tuitions are likely to go up because if I have a school and I have to pay tax now I have to do my calculations, I need to still pay salaries of staffs, I need to do so many other things like infrastructure that you need to maintain, so I’ll just adjust my tuition.”
On the implication it would have for Nigeria in the long-term, he said: “We may have long-term impacts on human development if we don’t find other safeguards to ensure that these does not create a bigger problem than the solution we are hoping to address.”
Also, special adviser to the President on Finance and Economy, Dr. Sarah Alade, also at the webinar, noted that the federal government is committed to ensuring growth across all sectors.
“We want to see prioritisation and implementation of critical infrastructure, physical, digital, financial infrastructure.”
We are deficient in infrastructures and we give priority to this
“There must be measures to diversify our revenue base, we are hoping in this plan that by 2025, the present revenue to GDP which is about a less than 8 per cent, we would be able to grow it to 15 per cent of GDP and then there must be continuous support and interventions for manufacturing, for agriculture and for MSME as well.”
Stressing that the government is also looking at a market driven economy movement to a unified liberalised foreign exchange market, which will guide what it does in the next four years, she added that, “we want to enhance non-oil forex earnings and that is that there’s institutional reforms in public sector, law enforcement, judiciary, secure property rights, and many other things which we also have in the in human development as we are prioritising quality education, health research and skills generally for our people.
“Then the philosophy of government for this plan, national development is the highest priority of government and we’re hoping government will unlock all constraints to ensure that economic growth is enhanced, inclusive, sustainable over the plan period and beyond to generate employment and reduce poverty.”
“So, government will go beyond the normal provision of an enabling environment to also participate in vital sectors of the economy for instance, transports, we expect that government will be able to do some of these things to encourage the private sector to be able to come in and you know, invest in these areas.,” she pointed out.