Friday, February 19, 2016 08:57 AM /FBNQuest Research
Our chart shows gross monthly collections of non-oil revenue (before distribution to the three tiers of government) through to November 2015. These total N3.15trn over 12 months, while the FGN projected N4.06trn for the calendar year and its 2016 budget proposals forecast N5.72trn.
This underperformance for 2015 did not extend to November, when total monthly receipts were 17% ahead of budget and 78% above the previous month. The positive variation was achieved due to unseasonally strong flows of N163bn from companies’ income tax (CIT). Looking ahead, the FGN has aggressive projections for this year despite not planning any tax increases.
Udo Udoma, the budget and national planning minister, has said that the FGN is not considering a rise in VAT “at the moment”. A doubling of the 5% rate would generate an additional N800bn as well as meet Nigeria’s commitment to fellow members of the Economic Community of West African States.
Customs and excise remains the poor relation of the four main non-oil revenue streams. The proposals project receipts of N862bn this year, fractionally lower than in the 2015 budget. Portfolio investors may be curious why the authorities have not hiked the duty on beer.
Other avenues to meet the aggressive projections include across-the-board efficiency gains, a close look at existing waivers and exemptions, the setting up of the Treasury Single Account (for FGN independent revenue) and, according to some sources, the collection of stamp duty.
4. Declining Federal Allocation Mounting Pressure on the States – Jan 19, 2016