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Nigeria: World Bank to give 36 states pills for speedy economic recovery

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In a bid mitigate the crushing effect of  COVID-19 pandemic on businesses and individual taxpayers and ensure the speedy recovery of economies of the 36 states, the World Bank, the Nigerian Governors’ Forum (NGF) and other stakeholders have agreed that state governments should introduce tax relief programmes and maintain sustainable revenue levels.

A webinar held last week by the stakeholders also said it has become imperative that states find a balance between granting tax reliefs and maintaining revenues at a sustainable level to get out of their liquidity crisis.

The new policy initiatives and directions were the outcomes of the virtual meeting held on Friday 14th August 2020, under the States’ Fiscal Transparency, Accountability and Sustainability (SFTAS) Programme for Results, jointly organised by the World Bank and the Nigeria Governors’ Forum (NGF).

The programme was midwifed by the Federal Ministry of Finance, Budget and National Planning and attended by 125 participants from the 36 States of the Federation including State Commissioners of Finance and Executive Chairpersons of State Internal Revenue Services.

The relief programmes by the states are focused on five main tax activities, including extension of filing and payment dates, tax moratoriums, waivers or reduction of penalties and interests over the extension period.

While some States are also offering rebates or discounts on taxes paid within a specific period, others are allowing the payment of taxes, fees and levies among others in instalments. In the same vein, states’ tax offices are now enabling filing and the issuance of tax clearance certificates electronically (online).

The SFTAS experts at the webinar concluded that such waivers for businesses are no longer optional, but have become an essential element of governments’ stimulus-targeted packages to facilitate recovery for businesses who face a liquidity crisis, and individuals whose livelihoods have been adversely impacted by the COVID-19 crisis.

The extent to which government revenues will be impacted by these reliefs will depend on the type of relief that they grant and their ability to raise their tax efforts simultaneously, including offering incentives for greater tax compliance.

The efforts are being incentivised by a new Disbursement Linked Indicator (DLI) under the Federal Ministry of Finance Budget and National Planning (FMFBNP) World Bank $750 million States Fiscal Transparency, Accountability and Sustainability (SFTAS) Programme for Results.

According to the World Bank, eligible states will be rewarded with USD2.5 million each in performance-based grants if they announce by 31st July 2020 and implement by ‪30th September 2020 a tax compliance relief programme for individual taxpayers and businesses to mitigate the COVID-19 impact.

The meeting set criteria to be met if a state is to receive the $2.5 million includig state announcements signed by the Commissioner of Finance or the Executive Chairman of the State Internal Revenue Service and published on state websites and in national dailies to ensure widespread awareness among taxpayers.

Furthermore, the state government should issue to their tax officials and collecting agents, guidelines for the implementation of the reliefs to ensure consistent execution by all and sundry.

Addressing the participants, the Programme Manager, Nigeria Governors’ Forum, SFTAS Technical Assistance Project, Mr Olanrewaju Ajogbasile, said  the Secretariat through the support of the FMFBNP and the World Bank, was available to provide technical advisory on the domestication of necessary reforms to meet the DLIs and more broadly, fiscal sustainability.

He noted that while some states had followed strictly the requirements of granting extension for filing 2019 annual returns and waiver for penalties and interests for businesses and individual taxpayers, while others have gone further to waive other taxes, fees and levies for a specified period of time.

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