2016 Budget Deficit: FG Rules Out Tax Increase

Minister of Budget and National Planning-Udoma Udo UdomaThe Federal Government on Thursday ruled out increasing taxes as a way of closing the deficits in the 2016 budget proposal presently before the National Assembly.

The N6.08 trillion 2016 budget proposal has a deficit of N1.84 trillion, which is to be financed by a combination of domestic borrowing of N984 billion and foreign borrowing of N900 billion.

Some experts had raised alarm over the huge funds to be borrowed to finance the budget and instead proposed that taxes be raised to offset the deficit.

But the Minister of Budget and National Planning, Udoma Udo Udoma, said government will rather concentrate on improving taxes’ collection.

Stressing that the government does not want to increase the suffering of Nigerians by imposing taxes, the minister said the government is aiming to increase corporate tax and Value Added Tax (VAT) collections by at least 20 per cent.

Udoma made this known while addressing State House correspondents at the end of the National Economic Council (NEC) meeting presided over by Vice President Yemi Osinbajo Thursday.

The minister was accompanied by governors Akinwunmi Ambode (Lagos), Willy Obiano (Anambra) and Badaru Abubakar (Jigawa).

Udoma said: “We expect about 20 per cent increase in VAT collection, which is conservative in terms of our revenue projections. We are expecting much more than that.

“With reference to the budget, one thing we are determined not to do is to cut any of those capital projects, because we need them to stimulate the economy. We are going to work with the National Assembly, to see how we can get savings.

“One of the areas we are looking at is our cash call elements.  The minister of state for petroleum is looking at how we can cut our cash call elements which is about N1trillion by innovative financing. So he is discussing with some oil companies and looking for some innovative financing which might pick up some of the financing so that we reduce our financial output and contribution by the federal government”.