 Well, we're back to talk about the NANDs and the plan to amend the finance act over 11.0 trillionaire deficit and Che Goucheau-Pitton will be joining the conversation as a financial consultant. Che Goucheau-Pitton, thanks for joining us. Thanks for having me. Good morning. Good morning and a little bit to it now. The 11.03 trillionaire deficit proposed fourth and 19.76 trillionaire 2023 budget of the federal government of Nigeria is of consent to the National Assembly and that's quite interesting, which is set to tackle, you know, through the amendment of some relevant sections of the Nation's Finance Act. Now, the aim and purpose or purpose of this amendment would be to double or triple the target area set for various revenue-generating agencies of government as a way of reducing the size of proposed budget deficit. Chairman, Senate Committee on General Services, Sani Musa, who made this known to journalists, he said that the budget of the country has been in deficit and only thing can, the only thing that can be done is to amend many things in the Finance Act so that we can generate more revenues from all the sources rather than depend on oil alone. Also, the lawmaker rather on the country's tax costum and all the laws which may be amended to finance the deficit. The Senate has through its Committee on Finance, an interactive session with the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmad on the 2023-2025 MTEF and FSP decried the proposed deficit in its proposal for the 19.76 trillionaire-2023 budget. How will Nigerians receive any further moves by this administration to tax them more? What will be the implication of this on the nation's economy? And that's why we're having this conversation with a financial consultant and expert, Shegushok Piton once again is glad to have you join us. Thank you. Thank you. Well, I like you to share your thoughts on it. You heard me and you had the thoughts of the National Assembly, the reason why there will be an amendment of the Finance Act just to tackle or solve the problem of budget deficit. What are your thoughts? Okay, thanks for having me. So first of all, I think it's important for everybody to quickly understand that what this means will be that there will be more burden on Nigerians from a tax payment perspective. So what the government is trying to do is, like they said, to reduce the deficit by increasing revenue and the direction that they've cast their gaze, sadly, is the direction for me, what I would like to regard as the path of least resistance. So, you know, we need more money. We have an 11 trillion deficit, which automatically would mean that we'll be going up and we'll know where Nigeria is at with regards to its huge debt burden and the fact that the federal revenue revenues can no longer is no longer able to cover its debt service obligation. So clearly, we can't continue to borrow more, right? So what the government is simply doing is to say, okay, look, we can't borrow more or we would like to reduce the amount of money we're borrowing. So what do we do? We need to increase revenue. How do we increase revenue? We need to tax people more. So this Finance Act will definitely be looking at ways of increasing means of cabling revenue from the people, either through further amendments, maybe to the capital gains, tax, who knows, maybe they will even go as far as to increase that, who knows. Tertiary education fund, the tax, the education tax. There are so many little bits and pieces of taxes here and there that the government will use the Finance Act to amend and increase. Unfortunately, you know, what this would do will income of people, the citizens, and maybe also of corporate organizations, you know, in terms of maybe encumbering available funds for additional investments that are burdened in the economy. So for me, yes, the government needs to look for a solution to the terrible revenue deficits that they face. But I am not very, very sure that increasing the tax burden on the economy is the best way to go. Certainly it's the quickest way to go, you know, because all you have to do is amend the law and it's like waving a magic wand and money just increases. But in terms of the long-term implications on the economy, I'm not very sure this is the way to go. I think the government has to be a bit more creative and I think the government ought to have, before now, the making changes to the very structure of the economy that would ensure that government is able to generate more revenues outside of oil than to continue to amend the Finance Act and increase the tax burden. Let's bear in mind that prior to 1999, prior to 2019, the Finance Act had not been amended for 20 years. And then somebody in the finance circles in government suddenly realized, hey guys, wait a minute, this tax law is very archaic. There's so many things that have changed. The provisions there are no longer realistic. So they amended it in 2019 for the first time in 20 years. And then thereafter, every year there's been amendments because it's suddenly become clear that, hey, this is an easy and quick way to increase the revenues of government. So for me, I think, like I always say about government business in Nigeria, it's the path of least resistance. It's almost with all due respect to the people in those places, it's almost like the laziest option to adopt in terms of solving revenue deficits and the budget deficits that we're trying to resolve. Okay. Shokuton, you have mentioned this. I mean, it's a good thing that you have actually spoken to Nigerians. I'm sure that those who are actually watching right now and understand what it means when the government is saying that we're amending the finance act to tackle the budget deficit and what have you. It just therefore means that, like you have stated, that it will be a burden on the economy tax and the people. So there will be more taxation. Well, you have said that that's not very effective. I like you to be very you know, deliberate and more specific. What can we actually do? I mean, what are other options that the government can actually take or actions to ensure that they solve, you know, the budget deficit and even the revenue issues that were faced with. This morning when we had Chris Cain didn't want to do, he talked about the issue of, you know, boring and continuous boring and what have you. And he said that there were a lot of lacunas or excesses in government spending and, you know, there were a lot of, you know, loopholes where government can gather funds. That's also another means. But I like you to, you know, mention or state categorically. Hopefully the president is listening and we'll probably might just have, you know, a change of heart. Yeah, so I was saying before that break the easiest ways to increase taxes, but then that that makes everything worse for everybody, including the possibility of increasing inflation, you know, and all of that. So and for example, in that regard, you recall in the 2021 finance act, a sugar tax was introduced a 10 naira per, I think it's per liter, or non alcoholic beverages was introduced. And, you know, it's taking time, but like everybody predicted, what has happened is that, you know, the producers of those products have simply passed down that additional costs to the consumer. And all of a sudden, people used to buy a bottle of Pepsi for 150 naira. It's almost it's 200 naira per now. And, you know, and we all know what that means in terms of impact on the pocket of the consumer in public. So going the tax way now. So what can the government do? First of all, I've always spoken about the looking in the direction of private capital to to to provide the services that government is financing. Now, why do we have such a heavy deficit in our budget? So you've got a 19 trillion budget. Typically, about 30% of that will be for capital projects. 70% of that will be, you know, for for the current expenses, including debt service, and what have you. And the government feels this particular government feels obligated to continue to push the infrastructure development narrative as aggressively as they can. You know, and, you know, I don't want to debate the effectiveness or the appropriateness of that, especially from the perspective of having to borrow so heavily to finance such infrastructure. But I think that if you want to go in that direction, then perhaps you should explore the possibility of of bringing private funds to to drive those projects, make those projects commercially viable and therefore attractive for private investors to bring their capital from abroad, ensuring that such capital is therefore cheaper than what it would get locally. Develop that infrastructure, build a model around it that would ensure that such investors can get their capital back over 20, 25, maybe even 50 year period. Of course, the challenges that come with that is stability of government policies, stability of political environment, and all of that. So a lot of investors will usually shy away from taking a long term position in environments like Nigeria, simply because governments, you know, if a new government comes in in 2023, who knows what they will do, who knows who that will be to start with, and then who knows what that administration will do, even if it's the APC, even if the APC hands over to another APC government, there is no guarantee that they're going to continue the policy thrust of this present administration, much less if it was, if it's a completely different party. You know, so there's that challenge about the historical inconsistencies that we've had with government policy formulation and even implementation, you know, having stability around all of that. So to get private funding can be challenging, and one would have thought that perhaps what these governments could have been doing over time, over the last four, five years, because, you know, they've been there for seven years, they've had enough time to make fundamental changes to the critical problems that have prevented us from going down this route. You know, so we, for example, have provided legal frameworks that would guarantee such investors that no changes can happen to the contractual obligations that the government might have with them, you know, in return for their bringing their money to help us build our rail lines, to help us build our roads, to help us build hospitals or whatever else that the government is, you know, investing in the power initiatives, building up dams for water and irrigation projects up north, and all of that, all of these projects need not be financed by government. I mean, I believe that there's a lot of capital out there, you know, in the global economy, looking for markets where returns are higher, traditionally higher than what they have in their own environment. So the government has not really done well in terms of exploring that avenue. So instead of doing that, they go borrowing and then the deficit increases and the cost deficit is so high, we then look at how do we reduce this deficit and we increase taxes, you know, it's the easiest way out and for me it's just lazy. So that's just one example of what the government could have done differently. Let's explore private capital, you know, there are so many other areas, you know, within this economy that we're simply not even exploring, we're not tapping into them at all, you know, we focus on oil revenues and we focus on taxing ongoing business within the economy. How about opening up new areas? How about opening up, for example, solid minerals, deposits are tremendous, you know, so how has this government tried to encourage the injection of private capital in that sector to ensure that one, that we can extract more, a whole lot more, and therefore generate additional revenues for government and that we can even produce locally, that we can process, you know, those, yes. Let's look at the deficit now and I mean very positive comments and statements that you have actually made and I'm wondering why every other time it feels like we don't understand the situation that we're faced with. So we're talking about the deficit now and so we're saying that every other time our expenses or expenditure exceeds our revenue, why is that the case? Because I mean if you look at the Nigerian's budget deficit, it succeeded 3 trillion, I mean 33 trillion in seven months. That's it in the past 10 years, if you want to say in 10 years, we have spent 32.6 trillion. Why are we always spending, it's like living beyond your means, why were we doing that? What exactly is the issue? Why are we always living beyond our means? Because when our expenditure and our expenses outweigh what we're going to be generating or what we earn, then it feels like we're living a fake life. So what exactly is with this pattern? It's not very difficult at all. So the problem that we have is first of all, I think it's important for us to understand that even this budget as large as it may sound, we're under budgeting for our development needs. We're simply not spending enough money, we're nowhere near a kind of budget that we should be deploying to drive Nigeria on the path of development. So we're not living above our means. The problem is we are simply not generating enough means to finance the things that we need to do. Our budget, if you convert our budget to a per capita basis, it's the lowest, one of the lowest, it's not the absolute lowest, it's one of the lowest, it's definitely the lowest amount for contemporaries. Even if we include Ghana in that narrative and I, you know, with all, you know, the sense of respect for Ghana, we shouldn't be considering Ghana as our contemporary. But Ghana has a higher per capita budget ratio than Nigeria. Our per capita budget is somewhere around 40 dollars per capita per annum. You know, it's terrible. We have countries like South Africa doing about 2,000 dollars per capita, you know, in terms of budget now, not GDP. Right? So we're not even budgeting anywhere near what we should be. Right? So it's not so much that we're living above our means. It's not that we're simply not generating enough revenues. The capacity and the potential, the revenue generating capacity and potential of the country is grossly under exploited, if you like. Right? So we can easily quadruple our revenue base if government will simply do the right things. The story about oil theft is there. It's tearing us in the face now. The impact has become clear even to the most pedestrian of observers. You know, so all of a sudden we have an opaque quota of about 1.8 million barrels per day. Nigeria produced half of that last month, with less than a million dollars, a million barrels per day. Yes, 900,000. I mean, so it's ridiculous. And that's happening because, you know, all of the old problems that we have, corruption, oil theft, lack of accountability, lack of proper audit processes, you know, lack of a proper monitoring of the value chain in the oil sector, all of that is there. And to compound that, we're not generating anything more from other sectors. So we haven't read any problem. And I'm saying that the solution is not, should not be, to, on an annual basis, amend your finance act. Because when you do that, you're destabilizing your fiscal policy framework and your fiscal environment, and you're driving investment away. We should be doing the exact opposite. We should make sure that our tax policies and, you know, fiscal policies are stable, so that foreign investment and local investment can increase. And if thereby you can leverage more private capital and hopefully reduce the budget deficit. So it's almost as if we're going about things in a top seat of the manner, we're going about things in an upside down way, instead of focusing on improving and stabilizing our policy framework, by destabilizing it and driving investment and scaring investors away. I mean, we're being prompted to leave round, but just in a few seconds, what would you say the implication would be on Nigerians and on the economy if, you know, the National Assembly moves with amendment of the Finance Act? They would amend it, you know, I mean, they already said they're going to do it. They don't have any other, they're not looking in any other direction to reduce the deficit. So they will amend it. And the implication is very simple. Quote me, inflation is going to increase. It's really as simple as that. You're going to tax people more. You're going to look for consumer products to increase tax rates on and all of that. And it's going to impact on inflation. We're ready for the 20% benchmark as it were. And if we continue down this path, it probably will only get worse. And of course, as inflation is going up, you are reducing disposable income, reducing consumption, which reduces investments, you know, I mean, it's all just a web, an interwoven web of confusion as far as I'm concerned. We simply need a bit more stability. But the government is saying, I mean, we hear government saying that this plan to increase salaries, I mean, there will be just an increase in salaries to help cushion the effect of inflation. So don't you think that that would just be, you know, some sort of a solution? Yeah, I mean, if that happens, it would help. There's no doubt about that because, you know, if disposable income is reducing and then you increase the income of the average man on the street, then clearly there will be more money to spend. So if that happens, it will be welcome. I doubt that it's going to happen, you know, because it's this same government that is saying it wants to increase salaries, saying it's running a deficit. So where would they get the money from? You know, so until maybe Nigeria and Liberal Congress steps up and decides to fight them again before we talk of maybe increasing the minimum wage again. So I mean, a lot of states have not even complied with implementation. Exactly. They haven't even implemented the 30,000, you know, minimum wage and we're talking of increases again. I think that's a pipe dream. I don't think it's going to happen. It will happen eventually after another round, another cycle of quarrels and fights. Well, we need to go now. Thank you so much. Shegun Shopitois, he's a financial consultant and has been, you know, fantastic speaking with you this morning. Great insight and perspective that you've brought on the issue. We appreciate your time. We look forward to sharing your thoughts on more national issues. Thanks for having me. Always a pleasure. And I said we take a break when we return. We'll have another interesting conversation. This one, you have the All Progressive Congress Presidential Campaign Council accusing the NLC of, you know, whether or not they're supporting the removal of subsidy, and that's what we're talking about. Stay with us until we return.