Revenue through VAT alone amounts to N235.77b
By Jeph Ajobaju, Chief Copy Editor
Abuja generated N1.15 trillion as non-oil revenue between January and August, 15.7 per cent above N992.62 billion prorated target driven by Value Added Tax (VAT).
But total revenue stood at N3.93 trillion, 27 per cent short of target, according to data Finance Minister Zainab Ahmed presented on the 2022 budget proposal and 2021 budget implementation.
VAT collection was N235.77 billion, which is N76.8 billion higher than N158.95 billion prorated revenue target up to August.
The federal government budgeted N238.43 billion as VAT revenue for the 2021 fiscal year, however, 98.9 per cent was collected in eight months.
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Nairametrics reports that VAT is now a thorny issue as Abuja faces a legal tussle with powerful states insisting they keep all VAT collected in their domain.
Up to N547.54 billion was generated as Company Income Tax (CIT), 20.5 per cent above prorated figures and 80.3 per cent performance against N681.72 billion for the whole year.
Oil revenue, which has for years contributed the most to government revenue, now lags behind non-oil receipts, averaging 61 per cent over the past decade, based on data compiled by Nairalytics.
Ahmed disclosed that N754.16 billion oil revenue by August was below target. It has only managed to account for 19.2 per cent of federally collected revenue, hugely underperforming by 43.7 per cent.
The decline in oil revenue despite market rally is largely due to the reduction in Nigeria’s crude oil production based on OPEC curbs.
“Although Nigeria’s total production capacity is 2.5 mbpd, current (year to date) crude production is about 1.4mbpd (slightly short of the OPEC+ production quota), and an additional 300,000bpd of condensates, totaling about 1.6mbpd,” Ahmed said.
OPEC+ has agreed to raise daily production by additional 400,000 barrels per day (bpd) by November, based on the agreement at OPEC meeting in July. Nairametrics says This could see Nigeria’s crude production record a slight boost.
January-August revenue breakdown
- N754.16 billion – from oil
- N78.2 billion – dividend share from Nigeria LNG Limited (NLNG)
- N2.44 billion – minerals and mining
- VAT – N235.77 billion
- CIT – N547.54 billion
- N338.66 billion – Customs; below N338.85 billion target
- N26.38 billion – Federation Account levies
- N1.95 trillion – federal independent revenue
Rising budget deficit amid revenue crunch
Muhammadu Buhari presented N16.39 trillion as 2022 Appropriation Bill to the National Assembly (NASS) on October 7. which is N1.82 trillion higher than the N14.57 trillion 2021 budget.
The allocation shows
- N6.83 trillion – recurrent (non-debt) expenses
- N5.35 trillion – capital expenditure (plus statutory transfers, GOEs capital and project-tied loans expenses)
- N3.61 trillion – debt servicing
- N10.13 trillion – 2022 budget funding, a N6.26 trillion deficit, representing 3.39 per cent of Gross Domestic Product (GDP)
Ahmed has clarified that the deficit will be sourced as follows:
- N2.51 trillion – from domestic and foreign loans
- N1.16 trillion – multi-lateral/bi-lateral loan drawdowns
- N90.7 billion – privatisation proceeds
Budget Office Director General Ben Akabueze said: “We need to understand that as large as the size of this budget might seem to Nigerians, and as you say, it is the largest so far, the truth of the matter is that our budget is still way lower than it should be.”
He reiterated that Nigeria faces a revenue problem, not an expenditure problem, a point buttressed by Federal Inland Revenue Service (FIRS) Chairman Muhammad Nami.
Per Nairametrics, Nami said Nigerians are still not as tax-compliant as expected, noting that billionaires in Lagos are more than taxpayers in some countries with higher Personal Income Tax (PIT) compared to Nigeria.
He disclosed that among Nigeria’s population of more than 200 million, only 40 million pay PIT, which is less than N1 trillion yearly.
Nairametrics writes that with slashing oil revenue due to market fundamentals beyond the control of Nigeria, the country has to look to other sources of income.
Despite the upturn in non-oil revenue, especially in CIT and VAT, Abuja and its agencies need to do more in gaining the trust of Nigerians to encourage them to pay tax