Tax credit scheme under fire as FIRS Chairman raises doubts, NNPC clarifies loan

Estimated reading time: 3 minutes

The N2.59 trillion Tax Credit Scheme for road construction, implemented under former President Muhammadu Buhari’s administration, faces scrutiny after the Chairman of the Federal Inland Revenue Service (FIRS), Zacheus Adedeji, expressed reservations about its effectiveness. This development adds a layer of complexity to the already controversial scheme, further raising questions about its impact and transparency.

During a Wednesday Senate Committee on Finance hearing, Adedeji questioned the scheme’s efficacy, sparking concerns about its potential shortcomings. However, in the same hearing, the Nigerian National Petroleum Company Limited (NNPCL), a key player in the scheme, offered clarification on a separate $3.3 billion loan facility secured for the Central Bank of Nigeria (CBN) to stabilize the naira.

The Chief Financial Officer of NNPCL, Umar Ajiya, raised the hope of the committee members that the scheme is helping in refixing of dilapidated roads across the six geo-political zones in the country with N664bn spent so far, the FIRS boss said the scheme was unlawful and should be discontinued.

Read Also: Nigerian Breweries announces price hike, cites soaring production costs

However, Adedeji said, “The mandate of FIRS lumped with execution of Tax Credit Scheme for road construction, is to access, collect tax and remit it into the federation account and not to appropriate it for any purpose through executive order.

“It is not the duty of FIRS and NNPCL to be paying contractors. The Ministry of Works should be in line with its core mandate, allowing to award road contracts and pay for them.

“The scheme, to some people, serves as faster way for road reconstruction or rehabilitation across the country, but we should stop increasing speed towards wrong direction.

“As a way of stopping the wrong approach, FIRS and CBN are holding meeting with the Ministry of Works Friday this week, where stock would be taken of what we have done through the scheme and thereafter, to the right path.

“We should, in a nutshell, not continue in the wrong trajectory.”

Adedeji’s reservations raise concerns about the scheme’s potential failure to deliver on its intended objectives. It remains unclear whether the tax breaks offered to private companies constructing roads have translated into tangible improvements in the nation’s infrastructure.

The lack of transparency regarding the specific projects funded and their completion status further fuels anxieties about the scheme’s accountability and potential misuse of public funds.

This episode could reignite discussions about the effectiveness of tax incentives as a tool for infrastructure development and the need for stricter oversight mechanisms to ensure transparency and accountability.