Some economists have lauded the 2020 budget proposal presented by Governor Ben Ayade of Cross River State, saying some of its components have the tendency to stimulate growth.
Recall that On Monday, November 21, Governor Ayade presented N1.1 trillion budget for the 2020 fiscal year to the state House of Assembly.
Capital expenditure is allocated N911 billion, representing 82.8% of the budget while N188 billion is allocated to recurrent expenditure, representing 17.2% of the budget.
Also, during the presentation, the Governor announced that from 2020, workers earning less than N100,000 in the state and owners of small scale businesses are exempted from payment of taxes.
Speaking on these components of the budget, a renowned economist and Lecturer in the Department of Economics, University of Calabar, Dr. Peter Ubi, said the budget was primed to stimulate growth.
Ubi lauded the governor for the tax exemption adding that the development will not only enhance investment but will also become a catalyst for sustainable economic development in the state.
He further commended Ayade for allocating N911billion representing 82.8% for capital expenditure saying that if implemented, the state economy will turnaround for good.
According to Ubi, for government’s industrialization policy to thrive, Small and Medium Enterprises which he described as a bedrock for any economic development must have a framework to thrive as well.
Declaring that the allocation of 82.8% of the budget to capital expenditure was a step in the right direction, he added that “the allocation for capital expenditure is clearly for small and medium enterprises to thrive because they’re the bedrock for any economic development”.
His word: “The tax project and the huge allocation for capital projects will very honestly impact the economy positively. Infrastructure are the drivers of economy and SMEs cannot drive without quality infrastructure. The SMEs form about 80% of the employment in the state so if the government is able to implement this budget, SMEs will prosper and become very competitive. It will definitely increase output and create more room for employment”.
Corroborating Ubi’s position, another economist, Mr. Saviour Mba said: “Frankly, if Governor Ayade can implement this Budget, investment will increase, output will increase and ultimately, welfare will be maximized as income is redistributed between the rich and the poor because the abolition of tax for those whose income is less than NGN100,000 will lead to income redistribution and may reduce income inequality in the long run.”
He however, sympathized with the Governor saying that “on the other hand, it will lead to huge revenue loss on the part of the government. This is more so as 80 per cent of income tax is from those who earn below NGN100,000 and they constitute almost 70 to 80 per cent of the work force in Cross River.
“Do not forget also that Cross River is engaged in huge debts servicing and allocation from federation account is meagre when compared to other states. When this is put in perspective, you can only sympathize with the Governor as well as imagine how government intends to finance it’s capital expenditure”.