Thursday, July 21, 2016 9:20am /FBNQuest Research
The Federal Inland Revenue Service (FIRS) has reported collection rates of about 90% for Q2 2016 and 73% for the first and second quarters combined. Its chairman, Babatunde Fowler, hopes to hit the target over the full year.
It was unclear whether he was referring to the service’s own target of N4.9trn set at the start of the year or the figure of N4.2trn (US$14.3bn) in the 2016 budget. Either way, the FIRS has developed some positive momentum in identifying new taxpayers and collecting their dues.
A different impression was given last week by the secretary to the government of the federation, who told the local media that collections overall this year were running at 50% to 60% of target. His statement singled out the impact of the sabotage of the oil infrastructure.
Collections are also running behind target at the Nigeria Customs Service. They averaged N43bn per month in January to April (see chart), compared with N72bn per the 2016 budget.
A combination of squeezed private consumption and fx rationing is probably to blame although we can expect some relief from the effective devaluation.
Fowler stressed seasonal factors in collections at a conference in Abuja on Monday. Receipts from companies’ income tax peak in the third quarter.
The FIRS is likely to outperform the other revenue collection agencies this year. The FGN is adamant that it will trim its capital expenditure plans rather than grow the projected deficit if, as we expect, it has to choose.
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