Tuesday, June 20, 2017 9:32 AM /FBNQuest Research
We comment today on gross non-oil revenue collection in the 12 months to February in the context of the projections for this year per the federal budget and national planning minister’s presentation to the National Assembly in mid-December.
Sadly the comparison is not seamless because the 12-month outturn (see chart) shows gross flows into the federation account while the projections are for FGN retained revenue. Also the aggregate totals in the budget were slightly revised in the bill signed off at the start of last week (Good Morning Nigeria, 14 June 2017).
The gross figures have companies’ income tax at N990bn, and the FGN projections at N810bn. This is a federal tax so the projection appears unusually cautious.
On the same basis, VAT amounted to N830bn gross while the FGN projection is N240bn. The state governments are the principal beneficiary of distribution from the VAT pool although it is quite clear there are no plans to hike the standard rate of the tax.
The projections are striking for the targets of N810bn for FGN independent revenue, and N560bn for recoveries and fines without providing supporting details. These underpin the projection of total FGN retained revenue of N4.94trn: without them the outturn is set to be highly disappointing.
The Federal Inland Revenue Service, the largest collection agency which is responsible for most non-oil taxes as well as the petroleum profits tax, has acknowledged the steady decline in its take from N5.01trn in 2002 to N3.30trn last year. While pleading the deterioration in the macroeconomic environment, it has highlighted the many initiatives in progress to turn around its performance.
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