IMF’s advice will not alleviate Nigeria’s economic crisis- Moghalu

Former deputy governor of the Central Bank of Nigeria (CBN) and political economist, Kingsley Moghalu, says he disagrees with the IMF’s recommendation that the government of Nigeria raise taxes.

According to him, this advice will not alleviate Nigeria’s economic crisis.

“What we need is more efficient and more widespread tax collection. Millions who should pay taxes don’t. Then we need to spend better, curb waste and corruption,” he tweeted.

IMF last week Wednesday asked Nigeria to raise incomes from taxes, particularly through ensuring compliance and expanding tax net in order to generate more revenues and cut burgeoning debt.

However, Moghalu opined that government can consider ‘Wealth Tax’ and end the regime of ‘waivers’.

“We need to spend more on things that yield economic dividends. And then we need to consider a “Wealth Tax” where the extremely wealthy pay their fair share as is the case in developed countries. Finally, we should end the regime of “waivers” that give wealthy businesses trillions,” Moghalu said on Twitter.

“Tax breaks. We have tax collection, revenue generation and revenue allocation/spending problems, not tax increase problems. Of course, many avoid paying taxes because they simply don’t trust the government. Trust must be restored in a verifiable manner, with increased transparency.”

The International Monetary Fund (IMF) stated that Nigeria’s debt is expected to continue to rise and that appropriate efforts must be made to produce essential revenues in its most recent Fiscal Monitor, titled “On the path to Policy Normalization,” which was released last week during its joint spring meetings with the World Bank.

“In general, what we are saying about Nigeria is the need for a medium-term plan to reduce debt vulnerabilities over time and it is because Nigeria has very low tax revenues. So, that makes it more vulnerable to these types of shocks and tightening global conditions,”Division Chief, Fiscal Affairs Department, IMF, Paulo Medas said.

NECA Advises FG Against Implementing IMF Recommendation

Similarly, The Nigeria Employers Consultative Association (NECA) has warned the federal Government against obeying the advice of International Monetary Fund’s(IMF’s) call for increased taxes in the country.

The NECA’s director general, Mr. Adewale Oyerinde, who announced this, reaffirmed that the IMF’s request that the federal government raise taxes in order to cut borrowing would be disastrous for a floundering economy.

Oyerinde explained that while such suggestions might seem to benefit FG by increasing its income, any move to raise taxes would have a severe effect on families, individuals, and enterprises.

According to him, “for a private sector already overwhelmed by multiple taxes, the imposition of additional taxes on services will make the business community more vulnerable with a trade off on growth and job creation.

“In an environment where individuals and corporate entities provide services and infrastructure that should normally be provided by the government, the best the government can do is to support and ease their burdens rather than considering any plans towards making them pay for its inefficiencies and fiscal indiscipline.”