In response to the ongoing economic and health challenges caused by the COVID-19 pandemic, the federal government says it has adopted appropriate counter-cyclical fiscal policies to accelerate economic recovery from the recent recession.
Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, said that the policies will stimulate economic growth in key sectors of the economy.
Speaking at the public consultation for the Finance Act, 2020, Ahmed disclosed that economic activities in the country are recovering gradually.
She explained that economic activities in the country are recovering gradually, which has reflected by the reduced contraction of 3.6 per cent in the third quarter of 2020, compared to the 6.1 per cent contraction in the previous quarter.
According to her, given the impact of the pandemic on the domestic economy, there was a clear need for proactive implementation of macroeconomic strategies that would support domestic revenue mobilisation, enhance investment inflow, stimulate job creation and restore the economy on the path of sustainable, diversified and inclusive growth.
“As we are aware, the COVID-19 pandemic triggered an economic downturn across most economies of the world. By the end of 2020, the world’s economy fell into recession with the contraction estimated at 3.5 per cent compared to the global growth of 2.8 per cent in 2019. The Nigerian economy was also impacted by the pandemic, reflected by the contraction in economic growth in the second and third quarters of 2020, respectively.
“As such, the Finance Act, 2020 provides fiscal relief for minimum wage earners (who are exempt from personal income tax), as well as commuters and other consumers of road transportation goods and services (who will now pay lower levels of duties and levies on imported vehicles). The Finance Act, 2020 extends the corporate income tax exemption in the Finance Act, 2019 for micro and small enterprises with an annual turnover of N25 million or less to include exemption from paying tertiary education tax,” she further noted.
“The Finance Act, 2020 also consolidates on the fiscal reforms introduced in the Finance Act of, 2019.
“The Act has introduced 80 changes to about 14 different tax laws including the company income tax Act, the capital gains tax Act, stamp duties act, oil and gas export free zone Act, customs and excise tariff etc. (consolidated) Act, Value Added Tax Act, amongst others,” Ahmed further explained.