Rising Debt Burden of Akwa Ibom State will Cause Retrogressive Tax Policies- CSOs Raise Alarm
By Ekemini Simon
Tax Justice and Governance Platform Forum of Akwa Ibom State, a coalition of Civil Society Organisations working to promote tax justice have warned of the danger of the rising debt profile of Akwa Ibom State to tax justice.
In a press conference held during the weekend in Uyo, the Chairman of the coalition, Harry Udoh said data from the Debt Management Office reveals an alarming surge in the debt profile of Akwa Ibom State from N215.99 billion in 2019 to N347.75 billion in 2023, highlighting a 61.1% rise in just four years.
Udoh noted that the surge in both the domestic and foreign debt profile of Akwa Ibom State poses grave implications for tax justice to include looming regressive tax policies that will disproportionately affect low-income residents and heighten socioeconomic disparities.
He added that besides regressive tax policies, opacity in financial management jeopardizes public trust in government stewardship.
Highlighting more challenges, Udoh said ” The escalating debt has adverse ramifications for public service delivery, notably in education, healthcare, water and sanitation. As debt servicing claims a larger share of resources, funding for essential services diminishes, threatening the well-being of vulnerable groups and hindering societal development.
“Furthermore, the mounting debt hampers entrepreneurship and economic advancement. Prioritizing debt servicing over crucial investments stifles innovation and job creation, fostering economic stagnation and perpetuating cycles of poverty.
“The Tax Justice Forum underscores challenges such as inadequate investment in critical sectors, heightened dependence on external financing, and restricted policy flexibility due to soaring debt levels.
“Examples of declining budget allocations to education and healthcare despite escalating demands underscore the adverse impact of high debt on these vital sectors. Limited investment in entrepreneurship exacerbates unemployment and economic instability.
To address the challenge, the Chairman said expanding the tax base by encouraging voluntary compliance and reducing exemptions would help generate more revenue for essential services.
He recommended that improvement in tax administration processes would reduce costs and promote greater transparency and accountability.
Udoh called on the government of Akwa Ibom State to prioritize investments in education, health, and entrepreneurship noting that such would help create sustainable long-term growth and foster inclusive development.
He added ” These recommendations align with the goals set forth in the Akwa Ibom State 2024 budget, which aims to achieve a GDP growth rate of 3.76% and inflation of 21% while focusing on partnerships with foreign investors, robust human capital development, and increased internal generation revenue.
“We emphasize the imperative of fostering economic resilience, promoting human capital development, and bolstering internal revenue generation.”