The decline in the price of crude oil in the international market may have forced the Federal Government to increase its target for non-oil revenue from N3.28 trillion in the 2014 budget to N3.53 trillion in 2015.
The proposal, which is contained in the revised 2015-2017 Medium Term Expenditure Framework sent by President Goodluck Jonathan to the National Assembly, is N243.62 billion higher than the non-oil revenue approved in the 2014 fiscal period.
The President had submitted the revised MTEF to the National Assembly, in response to declining oil price at the international market.
He said the recent developments in the international oil market necessitated that the MTEF be revised to allow adjustment in some of its key parameters.
The MTEF provides the basis for annual budget planning and consists of a macroeconomic framework that indicates fiscal targets, estimates, revenues and expenditure, including government financial obligations in the medium term.
The document prepared by the Ministry of Finance also set out the underlying assumptions for these projections, provide an evaluation and analysis of the previous budget and present an overview of consolidated debt and potential fiscal risks.
The sources of government’s non-oil revenue are corporate tax (company income tax, stamp duties, withholding tax, and capital gain tax); Value Added Tax, customs duty, excise and fees.
Others are special levies, independent revenues (Ministries, Departments and Agencies of government, operating surplus, dividends and consolidated revenue).
Giving a breakdown of the sources of non-oil revenue, the report stated that the Federal Government was targeting an increase of N370.95 billion in corporate taxes from N986.25 billion to N1.357 trillion.
In the same vein, VAT was raised by N30.48 billion from N845.45 billion in 2014 to N875.93 billion; while the customs duty, excise and fees had witnessed a decline of N81.85 billion from N782.38 billion to N700.53 billion.
The drop in customs duty, according to analysts, may be as a result of the Federal Government’s backward integration policy, which led to the ban on the importation of some items.
Also, the targeted revenue from special levies is expected to drop by N73.93 billion from N222.47 billion to N148.54 billion while independent revenue is expected to decline marginally from N452.04 billion to N450 billion.
The Minister of Finance, Dr. Ngozi Okonjo-Iweala, had said the Federal Government would block existing leakages and loopholes to generate more revenue.
Other areas that will boost revenue include the strengthening of tax administration to raise the non-oil tax collections.
She said, “On the revenue side, a lot of work was already under way prior to the fall in price to improve non-oil revenue generation. This is crucial, as many agencies have not been remitting surpluses to the treasury as they should. In this regard, I recently met with managing directors of banks to ensure their collaboration and compliance.
“Still on the revenue side, we are looking at our policies on investment incentives, and waivers and exemptions, and are working with the Nigerian Investment Promotion Council to stem the tide of abuses. Over 30 per cent of companies operating under pioneer status abuse their tax exempt status. We shall also look at the Customs to plug existing leakages and loopholes to enhance revenue.”
She lamented that only 25 per cent of Small and Medium Enterprises were registered taxpayers, noting that remedying that would broaden the tax base.
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