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Budget 2017 - Official Rethink on Revenue Collection

Proshare

Tuesday, February 14, 2017/ 10:57 AM /FBNQuest Research

The FGN’s 2017 budget proposals suggest a rethink on revenue collection. They see non-oil earnings of N1.37trn out of a N4.94trn (US$16.2bn) total for the FGN, which is not to be confused with federally collectible revenues.

The rethink amounts to an acknowledgment that a sizeable increase in collections from the non-oil economy, even from a low base, is a programme for several years. The proposals see richer pickings from the oil economy (N1.98trn) whereas the 2016 budget set overambitious targets for non-oil and independent revenues.

In January-September 2016 total revenues for the account of the FGN were just N2.17trn, and therefore far short of the full-year target of N3.86trn.

The underperformance applied both to the oil sector (on account of sabotage of pipeline infrastructure) and to the non-oil economy (due to depressed household demand and regulatory changes such as the CBN circular on import items no longer eligible for fx).

The non-oil revenue projections for 2017 are not available by collection agency. We can say, however, that the FIRS is comfortably the largest agency, responsible for petroleum profits tax, companies’ income tax, and import and non-import VAT. It has met its collection target every year this century other than 2006, 2015 and, almost certainly, 2016.



Recoveries are outside the remit of the FIRS. The authorities announced at the weekend that they had recovered US$151m and N8bn in stolen monies in less than two months under a new “whistle-blower” programme.

The 2017 budget proposals project a total of N565bn (currently US$1.85bn) from recoveries, which are being treated this year as other non-oil revenues rather than as a deficit financing item.


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