Pros and cons of Nigeria's economic stabilisation bills

Nigeria is embarking on a significant overhaul of its economic stabilisation bills, with proposed changes to about 15 tax and fiscal establishment laws. The aim is to address inflation, promote fiscal discipline, and complement monetary policy measures. Theo Emuwa, Partner at Aelex, shared insights on the potential impact of these bills in a recent interview with CNBC Africa. The proposed changes in the economic stabilisation bills signal a shift in the country's approach to economic management. One key aspect of the bills is the redistribution of tax burdens, with the objective of reducing the burden on low-income earners while potentially increasing it for higher-income individuals. Emuwa highlighted that the government aims to create a more equitable tax system that benefits those who earn less, reflecting a philosophy of shared responsibility. However, the ambitious scope of the proposed changes raises questions about the feasibility of timely implementation. Emuwa noted that with multiple taxes to review, the process could extend beyond the current year. Public hearings, feedback incorporation, and potential adjustments may prolong the legislative process. Despite the challenges, the government remains optimistic about the bills' potential to curb inflation and align with monetary policy objectives. Emuwa emphasized the importance of enhancing productivity alongside fiscal and monetary interventions. Drawing on an example of agricultural production, he underscored that simply injecting more money into the economy without corresponding productivity growth could fuel inflation rather than economic expansion. The need for structural reforms and efficiency improvements is critical to driving sustainable economic growth. The proposed changes also target value-added tax (VAT) and seek to enhance support for small businesses. Additionally, the government aims to promote local currency transactions for agencies like Mimasa and the NPA. Emuwa highlighted the shift towards strengthening the Naira-based economy and reducing dependence on foreign currency transactions. Discussing the implications of tax identification initiatives, Emuwa expressed support for leveraging existing databases like the BVN and NIN to widen the tax net. He questioned the necessity of creating new databases when comprehensive data already exists in current systems. Embracing data harmonization and integration could streamline tax identification processes and enhance efficiency. As Nigeria navigates the complexities of implementing the economic stabilisation bills, stakeholders must scrutinize the operational intricacies and potential challenges. The alignment of fiscal, monetary, and taxation policies will be crucial in achieving sustainable economic stability and fostering inclusive growth. The government's commitment to driving economic reforms signals a proactive stance towards addressing key economic challenges and advancing long-term development goals.