Minister of Finance, Kemi Adeosun, has given an update on Voluntary Assets and Income Declaration Scheme (VAIDS) as well as level of compliance.
The VAIDS programme offers a grace period for tax defaulters to voluntarily pay back to the government what they owe.
President Muhammadu Buhari recently approved extension of its deadline to June 30, 2018.
Adeosun, in a chat with journalists on Sunday in Washington DC after the just-concluded 2018 World Bank/IMF Spring Meetings, said VAIDS has been successful so far.
She said: “We took the decision to extend VAIDS because we were getting a lot of appeals especially from professionals, who said the volume of people that want to comply demands that government give more time and we considered the options and decided that on the balance of averages.
“The level of compliance has been considerable especially personal income taxes, and the state is excited about the number of people who have adjusted their level of compliance.
“Let me give example with Ogun State. I was speaking with the Chairman there, and he said the number of people paying N10 million and above in Ogun State has risen to 200. We we asked for that statistics before, I do not think that Ogun had more than 20. So, VAIDS has succeeded in getting a High Networth Individuals (HNIs) really stand up to pay their fair share for national development.
“There is one person that paid N250 million and more under VAIDS. It is a very successful programme and we know a lot of people are waiting for the extension and we want more people to come in.”
On debt rebalancing, the Minister recalled that when the current administration came on board, 80 percent of debt was short-dated, with a tenure of two years or less.
“Interest was compounding on debt service to revenue. So what we did was to restructure, and we told the debt management office to stop issuing 90 days bill. Issue 180, 360 and bonds to reduce your interest cost.
“Secondly, most of what we owe was domestic and the interest rate was high as 19 pr 20 percent. Today, what DMO is paying is around 13 per cent because we have restructured that portfolio, refined some into dollars.
“We are all hearing about the Feds raising their rates and we have already locked in for a period of 30 years. So that rebalancing was timely, because we took advantage of the timing. It was the first time Nigeria came into the capital market in two and half years, and we were 872 percent over subscribed. It was a massive vote of confidence in the way we were handling the economy.
“One of the advantages of the Nigerian government borrowing heavily and coming out of the domestic market was for the banks to be able to lend to the reel sector. If we don’t allow the private sector to grow and only government is borrowing, we cannot grow. The real fiscal buffer is an economy that is growing strongly. That is the real shock absorber and then we can weather the storm if there is a storm.
“About GDP projections trending downwards, we are very confindent that if we implement our plans diligently, we can grow this economy. Yesterday, there was a meeting of finance ministers of Africa and everybody was saying Nigeria we want to be you. You have a 20 percent debt to GDP and 6 percent tax to GDP, it’s obvious what you need to do and you are already growing. If you just fire your revenue and fix your infrastructure, you will grow.
“Some of the countries have no fiscal headway. One of my other colleague said I have debt to GDP of 68 and my tax to GDP is already 20, I have nowhere to grow. We have headroom to grow so what we all need to do is to come together, I think that’s where NEC will be really important. All these roads and rails now transalating to real projects and jobs for our people. Just a road doesn’t create jobs, what creates jobs is for people to open businesses and taking advantage of opportunities and going to the next mile.
“That’s why we need the state governments and private sector to key in. Specific projects not we are diversifying, we don’t want that anymore. Which project, where? We are confident that by 2019, the growth will be far far more robust than what we have now if we can remain optimistic but vigilant. We’ve recovered a lot of assets and we’ve redeployed assets. Properties seized, when we see agencies renting, we move them there. We’ve done that a lot.”