Abstract

Research Journal of Finance and Accounting. Journal of the International Institute for Science,Technology and Education,USA March 2012 Volume 3 Number 7 pp.112-116. The Nigerian government established the National Economic Empowerment and Development Strategies (NEEDS) in 2003 to achieve its trade policy of which the reform of Nigeria Custom Services is one of the major functions. Over the years, custom and excise duties have been major sources of revenue apart from crude oil. However, the problems of corruption, fraud and malpractices together with inefficiencies and ineffectiveness in operations have hindered the desire to contribute maximally to the economic development of the nation. The central objective of trade policy was to provide protection for domestic industries and reduce the perceived dependence on imports; reduce level of unemployment and generate more revenues from the non-oil sector, hence tariffs on raw materials and intermediate capital goods were scaled down. Duty exemptions and concessions remain some of the quantitative policy instruments for attracting investment and boost domestic production. This paper reviewed; discuss Tax Expenditure and the Nigerian experience, especially on loss of revenue from customs. The paper adopted analytical review and comparison of tax incentives in Sub-Saharan African Countries between 1980 and 2005 and revenue loss by Nigerian Customs Services from 2004 to 2006.It was discovered that the nature and application of these incentives have been considerable simplified such that duty exemptions and concessions remain some of the quantitative policy instruments for affecting trade policy in favour of domestic industries. It was further discovered that Nigerian Customs Service is much criticized for alleged corruption and inefficiency. There has been problem of sharp practices that collectively deprived the government of revenues. There is under-assessment of payable duties, unauthorized transfer of funds, and abuse of waivers, concessions and exemptions as well as non-remittance of government revenues. The paper concluded that reductions in tax expenditures could simplify the income tax and make it less prone to abuse, especially if part of the revenues from the trimmed tax expenditure were used to cut marginal income tax rates. The paper recommended that the government should make public all the production sharing agreements (PSAs) in the oil sector, and subject this to public review to eliminating the fiscal incentives provided; Undertake the promised review which should be made public, of all tax incentives with a view to reducing or removing many of them, especially, those that involve the exercise of discretionary powers by ministers; and provide on an annual basis, during the budget process, a publicly available tax expenditure analysis showing annual figures on the cost to the government of tax incentives, and showing who the beneficiaries of such tax expenditure are.