Declining Revenue: FG to Embark on Aggressive Tax Drive

Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala

Eromosele Abiodun

Although Nigerians are waiting for the 2015 budget to be signed by President Goodluck Jonathan, they can expect a more aggressive stance from the revenue collection agencies, THISDAY can report.

The Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala recently announced new taxes on luxury goods and a review of the many waivers and exemptions currently in place.

However, in the view of analysts, these welcomed steps and the elimination of ghost workers and pensioners from the federal payroll will not be sufficient.
To this end, the federal government plans to embark on aggressive tax drive and block loopholes to avoid having to borrow heavily to fund deficit.

“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,” said analysts at FBN Capital.

They added: “Details of the harmonised position of the assembly are very limited. We do know that its projection for statutory allocations amounts to N368 billion, which includes a N30 billion reduction from recent years to N120bn for the assembly itself. The Senate’s earlier draft increased the FGN’s capital spending by 10 per cent (from the executive’s proposals of mid-December) to N700 billion, and trimmed the recurrent budget from N2.61 trillion to N2.58 trillion."

Furthermore, 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.”

The analysts added that the agreed a harmonised  position by the two arms of the national assembly is a conservative assumption, which would leave the federal government with some room for manoeuvre.

“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 stressed.

Culled from: http://www.thisdaylive.com