The Senate and the Central Bank of Nigeria (CBN) on Wednesday disagreed over the remittance of excess revenue to the Consolidated Revenue Fund (CRF) from its yearly N2.3 trillion budget.
Chairman, Senate Committee on Finance, Solomon Adeola, made the allegation during a public hearing on the 2022-2024 Medium Term Expenditure Framework/Fiscal Strategy Paper (MTEF/FSP) organised by the committee in Abuja.
He said major revenue generating agencies, such as the CBN and the Nigerian National Petroleum Corporation (NNPC), among others, have failed to remit their operating surpluses to the CRF over the years.
But the CBN denied the allegation, saying “it is 100 per cent not correct.”
The apex bank insisted that it has never defaulted in remitting 80 per cent of its annual revenue surpluses to the CRF under the Fiscal Responsibility Act.
While inviting the Director-General of the Budget Office, Ben Akabueze, to make his presentation, Adeola said: “I want you (DG Budget Office) to speak to the idea that in budgeting, some revenue-generating agencies spend their revenue hiding under the guise that what accrued to them is not enough for them to carry out their functions, and as such, they need to augment it with whatever they generate. Is that the position of the law?
“For every government agency that exists, it is expected that once you are coming to budget defence with your budget estimates, there should be a corresponding revenue estimate that you are contributing to the budget.
“Because in more than 30 per cent of the revenue-generating agencies, their idea is that budget is where you go to take and not where you contribute.
“From the preliminary investigation carried out by this committee, our findings are not palatable at all. A lot of heads of agencies have taken over the agencies as their personal property.
“They have decided to embark on a spending spree with nobody challenging them.
“We invited some agencies and discovered that since their existence, it was the first time anybody would invite them for an investigative hearing on how they have been doing concerning revenue generation.
“I give you an example. Out of the 60 GOEs (Government-Owned Enterprises), I can conveniently say that agencies like the NNPC, I don’t know when last they contributed from their excess revenue into the Consolidated Revenue Fund, except recently when they declared profit and I know that profit will translate to payment into the CRF.
“The CBN, of an average budget of about N2.3trillion a year, it is expected that at the end of every financial year, whatever accrues to you as excess revenue, a certain portion of it must be paid into the Consolidated Revenue Fund.
“As we speak, within the last five to six years, CBN has not contributed anything. They are here. If that is not a statement of fact, I will back it up with verifiable evidence.
“So, all these and more are issues bordering on the idea of ‘let’s grow revenue’. We are growing the revenue but some people are spending that revenue illegally.”
Deputy Governor of the CBN, in charge of Economic Policy, Dr. Kingsley Obiora, who represented Godwin Emefiele at the session, faulted Adeola’s claim.
Obiora said: “I just want to, with due respect and deep reverence, categorically say that the allegation that the CBN has not remitted surpluses in any year, let alone the last five years, is 100 per cent not correct.
“We have in the last five years remitted our surpluses under the law. The Central Bank of Nigeria Act 2007 which you graciously passed stipulates that we transmit 75 per cent of those surpluses but the Fiscal Responsibility Act which you again graciously passed, demands 80 per cent.
“As a responsible government agency, we follow the Fiscal Responsibility Act and we do remit 80 per cent of our surpluses every year.
“Lastly, the Ministry of Finance, Accountant-General of the Federation and Budget Office will tell you they have no better friend than the Central Bank of Nigeria.”
In his response, Adeola directed the CBN to produce documents to show remittances made by it over the years and make it available to the Committee not later than tomorrow.
He asked CBN to equally produce its audited account in the last five years as well as its position paper on monetary policy point of view on the 2022 – 2024 MTEF/FSP being considered by the committee.
Adeola added: “He who comes to equity must come with clean hands. Since you have declared before the whole world that CBN has been remitting 80 per cent operational surpluses into CRF, we must see the documentary evidence, as that would lay the controversy to rest.
“Let’s have these documents latest by 11.00 am on Friday.”
Also yesterday, there was a mild drama when the Comptroller-General of the Nigeria Customs Service, Col. Hameed Ali (rtd.), expressed frustrations over the inability of his agency to raise enough revenue from taxes on import.
He, therefore, called on the National Assembly to empower the NCS through appropriate legislation to collect excise duty on carbonated drinks.
Ali said: “We have low production within the country and therefore we are unable to expand our excise duty base. We have said this so many times that we are supposed to be collecting excise on carbonated drinks.
“The policy of the government is to reduce consumption of items that are injurious to our health. That is why alcoholic beverages are being taxed and we are collecting them. Tobacco is being taxed and we are collecting it.
“Today, Coca-Cola is producing in Nigeria and paying no excise. It is only in Nigeria that Coca-Cola is producing and not paying excise duty. All other carbonated drinks are also injurious to our health.
“So if we tax tobacco and alcoholic beverages, I see no reason why we should not tax the carbonated drinks.
“We have said this for the past five years I have been on this seat, and up till today, we have not been able to get it. The reason I don’t know.
“So, Mr Chairman, my submission is simple. We will continue to rely on the unpredictable atmosphere to collect as much revenue as we can, but for us to be precise and more predictable, we must pay more attention to our industries and extract excise from them. That would be more predictable and much more realisable.”
But lawmakers kicked against Col. Ali’s proposal, saying such an action could lead to the total collapse of the manufacturing sector which is currently struggling to survive the harsh economic situation in the country.
Senator Tokunbo Abiru, representing Lagos East, said this s not the appropriate time to implement such a policy in the country.
Abiru said: “As to Excise Duty in relation to carbonated drinks, it is a catch 22 and I can explain.
“At a stage where the industries in the country are struggling, equally disposable income is at a very low ebb right now, you don’t want to create a situation where people’s ability to produce is reduced.
“At the same time, I am mindful of the health implications that you have talked about but note that the people who drink carbonated drinks the most are young people and they still have the energy to burn them out.
“The older people drinking them should be guided rather than bringing a punitive policy that would slow down production. I just want us to be careful, this might not be the right time to do this.”
NNPC Group Managing Director, Mele Kyari, lamented that the agency was spending most of its profit that should go into the federation account, to subsidise the petrol which runs into billions of naira every day.
Kyari noted that a larger percentage of the 60 million litres of the subsidised petrol being evacuated from the various NNPC depot did not represent the actual consumption, saying it was being smuggled outside the country.
“Our efforts at raising revenue are being hampered by smuggling, round-tripping, and other sharp practises
“There is currently an inter-agency collaboration to stop the smuggling of the PMS but the reality is that the practice will continue in as much as there is a difference between the amount we sell in Nigeria and the price elsewhere.
“It is not beyond government but it is an extreme situation to manage. Any time the NNPC supply 60 million litres of PMS we will record a shortage. As far as Sudan, you will see Nigerian subsidised PMS there and that’s the reality we are dealing with.
“When we sell at N162 and we found countries that sell at about N500 per litre, there is every possibility that people will buy here and take to such places. This is having a toll on our foreign exchange,” Kyari said.
(The Nation)
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