Introduction

In 2019, the Road Infrastructure Development and Refurbishment Investment Tax Credit Scheme (RITCS) was announced to bring about the much-expected reform and put Nigeria on the development path closer to the new emerging paradigm, Public-Private Partnerships in Infrastructure. It seeks to refurbish roads by offering tax credits for construction and reconditioning. The effect it has on the economy is what this article gauges.

Impact Appraisal of RITCS on Infrastructure

The RITCS has also further harnessed the participation of the private sector infrastructure. Moreover, since the introduction of the RITCS, it has funded critical road network infrastructure, mobilizing the amount of N97.4 billion. The scheme also reduces the CIT (Company Income Tax) for corporations investing in roads. It has an aspect of financial uplift, and that makes it more appealing. Besides, RITCS will benefit from the construction of 33 major roads. This may mean the 33 major roads constructed are improvements in the transport system and improvements with reduced logistics costs. Meanwhile, the government does approve N621.2 billion for more projects, of course, an indication of commitment to infrastructure upgrade.

Analysis of Fiscal Consistency and Policy Stability

“RITCS will depend much on being aligned with stable national tax policies. The 2017 Nigerian National Tax Policy frowns on sudden changes to tax incentives, as this will discourage policy reliability.”. However, allusions by the Federal Inland Revenue Service (FIRS) to the effect that the scheme is likely going to be unconstitutional and interfere with the performance of tax collection obligations. First call to abolish RITCS point out to a policy conflict that may derail the objectives. Such an end to the scheme could be a great deterrent to investments, and that would upset economic progress.

Conclusion

It is in this light that the proposed RITCS will assume paramount importance in the tackling of Nigeria’s infrastructural challenges, thus; its sustenance becomes compliant to law and stable policy. Policymakers must take a degree of care due to the integrity of the scheme and its alignment with fiscal responsibility.

Particular of this analysis greats underscore the stable tax policy and consistency of governance that may bring out the investment and propel economic growth. Another research might, in the future, establish the effects of RITCS that it has on PPPs, hence realizing an effective way of undertaking such projects.

Author:

Lawal R. Ayoola

Managing Partner, LRA Consulting.