• Thursday, July 25, 2024
businessday logo

BusinessDay

Budget: Why I’m opposed to tax increase – Bassey

Gershom-Bassey

Vice chairman, Senate Committee on Petroleum Upstream, Gershom Bassey, has kicked against tax increase to fund the 2016 budget.

Bassey, a People’s Democratic Party (PDP) senator representing Cross River South Senatorial District, advocated for broadening of tax base as well as increase of tax net.

Speaking during the budget debate, Ike Ekweremadu, deputy Senate president, and Sola Adeyeye, chief whip, had advocated for Communication Tax and tax on allowances of public office holders in the country to fund the N6.08 trillion budget.

These, they suggested, should be part of measures to fund the budget deficit of N2.22 trillion.

But in a chat with BusinessDay, Bassey argued that Nigerians cannot afford the burden of tax increase on the heels of global economic downturn, and also opposed the luxury and stamp duty tax.

The naira depreciated to N302/$ at the parallel market, while crude oil price dropped to a low of about $28 per barrel in the international market last week.

“I don’t believe that we should increase taxes or anything by a dime. Rather, what we should be talking about is broadening the tax base and increasing the tax net. The whole philosophy of taxation is that they shouldn’t be punitive.

“So, I think that Nigerians are at the point where they cannot afford to pay more taxes. They are taxed enough. Already, we are talking about removing fuel subsidy. Now, if you remove fuel subsidy and tax; that will be a bit punitive. And I don’t believe in that,” Bassey said.

In her visit to the Senate leadership recently, Christine Lagarde, managing director, International Monetary Fund (IMF), called for increase in Value Added Tax (VAT) from 5 to 10 percent, expressing regret that Africa’s largest economy had one of the lowest VAT rates in the world.

Bassey, an opposition lawmaker, harped on the need for ministries, departments and agencies (MDAs) to provide ways of funding the budget during budget defence, saying the deficit could hit N3 trillion due to drop in global oil prices.

On concerns that the budget is over-ambitious, he said with the right political will, Nigeria could recover from the current economic downturn.

His words: “I don’t believe the budget is ambitious enough because I’m a great believer in deficit budgeting. I have seen a lot economies recover using deficit budgeting as a tool. The classical example is always with the Great Depression in the United States. Franklin Roosevelt recovered the US economy using deficit budgeting and the same thing with President Obama.

“So, deficit budgeting is not something to be afraid of. I have no problem with that. But it must be rooted in reality. We need to deepen the conversation with the Executive. How are you going to fund this budget in the face of the type of huge economic headwinds that we are facing worldwide? They need to come and answer that question in a way we can understand.”

Ekweremadu had argued that the budget was unrealistic in view of dwindling oil prices and called on lawmakers to pass a budget that would be easy to implement.