Fresh crisis looms over budget 2022

By Uche Chris

Fresh crisis seem to be brewing over the 2022 budget signed into law by President Buhari on December 31, 2021, as the executive may be on a collision course with the National Assembly over the insertion of more than 6000 projects. President Buhari had, while signing the budget, lamented its ‘padding’ by the NASS which may make the budget “un-implementable”.

Also the budget is facing opposition from the Organised Private sector, OPS, and Nigeria Labour Congress, NLC, over the introduction of five new taxes, levies and duties by the New Finance Act 2022, which private sector and labour claim may eliminate over 11,000 jobs.

The Finance Act provides the legal framework for the imposition of the new taxes and duties. One of the taxes is the N10 per litre of non-alcoholic carbonated and sweetened beverages, which is projected to raise N81 billion revenue for government.

President Buhari had regretted the insertion of the projects by the NASS, promising to send a budget amendment bill to the house to redress the anomalies introduced by the law makers. The President submitted a budget of N16.2 trillion based on the oil price bench mark of $57 per barrel, which the assembly increased to N17.1 trillion with the oil price of $62.

But there are indications that the NASS may not be amenable to drop those projects included in the budget as some observers believe that these are election ‘projects’ that will guarantee their return to the NASS since President Buhari would not be running again.

Others have also argued that the law makers may be preparing their retirement benefits with the projects, as many of them may not return to the assembly. Historically, every new government witnesses a high turnover of legislators. Consequently, it is assumed that the departure of President Buhari may also lead to retirement of most of the members of the NASS.

Since this government, there has been this perennial clash between the two arms of government over which has the final power of appropriation. This problem came to the fore because of the high level of budget padding experienced under this regime.

However, Senator Ita Enang, a senior presidential adviser, said the president is justified in expressing strong reservations over the padded budget, insisting that it is the duty of the executive to find the funding for the projects and therefore, it should decide the projects that will go into the project.

“One thing we need to understand is that there is no dispute or disagreement of any nature between the executive and NASS. It is one government and everything is done with the best interest of Nigerians. The president has the right to raise those observations to put the NASS on notice that an amendment will come in due course”, he said in monitored television programme.

“Also, the budget is based on deficit and some of the loans are tied to specific projects; therefore if you reduce the amount for the projects, it means that they would not be completed and the repayment which is supposed to come from the projects will not start. This will create further problems for the country.”

Mr. Paul Alaje, senior economist, SPM Professional, said, that the budget may raise more tax revenues for government but how do the taxes translate to jobs. “What should concern us most is how the budget will create jobs. The new taxes are reflected in the capital expenditure, which is still less than 30 percent, and this is what crate jobs.

“To raise taxes for recurrent expenditure is to further restrict economic growth and increase poverty and unemployment. This government has had a deplorable performance with capital expenditure since 2016, while at the same raising recurrent expenditure to almost 100 percent of revenue. This is the last budget the president will fully implement and it does not look it will change much.”

He said the tax policy is wrong, because unemployment, at 33 percent, is high, and 80 million people living below poverty line. When people are not working, he argued, how would be able to pay tax; “so what we need to increase is the tax bracket of the people paying tax, rather than raising the tax rate. Increasing the tax bracket requires putting people to work, which more and higher taxes will discourage.”

Renowned economist and chairman of Financial Derivatives Company, Mr. Bismarck Rewane, said the size of the budget amount may be deceptive because when inflation and deficit are discounted, the size and impact pale in significance.

“Nigeria operates a federal and states’ structure and the federal budget of N17 trillion is only a part of it; the 36 states may also budget N14 trillion, which amounts to a total of about N30 trillion, which is just 10 percent of GDP. Given its size and resources, Nigeria can do better to improve its standard of economic performance.”

Dr. Godwin Owoh, an economist and policy expert, dismissed the whole assumptions behind the budget, insisting the budget cannot be relied on to achieve those projections because the underlying facts are fraudulent and grossly mistaken.

“There are no reliable figures with which to properly bench mark the budget and its performance; the GDP is a fraction of the national GDP, because it only reflects the federal output without reference to the states.

“All those macroeconomic aggregates are negative in real terms because three quarter of the nation’s economy is inactive; when unemployment is high as we have and people are poor, production cannot take place; so where is growth coming from. The economy is on auto pilot in a crashing plane”, he said.