ABUJA: The federal government will have more plans to boost the nation’s non-oil tax revenue when it responds to the national assembly’s recent harmonised 2015 budget proposals, experts in the Nigerian financial sector have said.
The federal government had announced a range of plans to raise non-oil tax collection in its 2015 budget when the Coordinating Minister for the Economy (CME) and Minister of Finance, Dr. Ngozi Okonjo-Iweala, submitted the 2015 appropriation to the national assembly in mid-December 2014.
The CME had stated that as part of its measures to shore up revenue in 2015 following dwindling oil revenue, the federal government of Nigeria looks to raise a total of N84.06 billion from luxury tax surcharges and savings from expenditure measures.
In the view of analysts, these welcome steps and the elimination of ghost workers and pensioners from the federal payroll will not be sufficient.
Revenue generation in Nigeria is very low (12 per cent of GDP in 2013) when compared with the level in middle-income African economies and emerging economies generally, which it puts at 22 per cent and 20 per cent respectively.
“This poor record as highlighted by the publication of the new national accounts by the Debt Management Office (DMO) has since been exposed further by the slide in the oil price. The figure for 2013 is for gross federation account revenue before any deductions, and can be divided into 8.4 per cent for oil and 3.6 per cent for non-oil. To pursue another angle, we can view this breakdown in the context of the structure of constant price GDP, of which oil and gas supplied just 10.3 per cent of the total in 2014,” said analysts at FBN Capital.
“That spending compression has become unavoidable is clear from the sharp fall in gross revenues in the federation account for monthly distribution from N630 billion in July 2014 to N416 billion in January,” they said.
“At this stage and in the absence of new figures for revenues, it is difficult to put the impact of the oil price slide into context. The federal minister for works told the Senate last week that just N46 billion had been released from his ministry’s capital budget for 2014 of N99 billion, and that his allocation for the current year had been slashed from N100 billion to N11 billion.”
“We recall the revised threshold of just $40/b in the Angolan budget for 2015. Our own forecasts, which date from early January, have an average price of $58/b for the year, with $65/b for end-year. Their headline assumption is $53/b for the oil price this year, a compromise between the Senate’s $52/b and the House of Representatives’ $54/b. We noted at the time of the Senate’s approval of its draft that the legislature had “smelt the coffee” following the slide in the oil price, “the analysts said.
