2015 BUDGET: Less Oil, More Of Taxes
AS the nation awaits the final passage of the Government’s 2015 fiscal plan by the National Assembly and the eventual assent by the President, the Director General of the Budget Office of the Federation, Dr. Bright Okogu has again allayed fears expressed by Nigerians over its funding possibilities, following the continued sliding fortunes for oil mineral revenue.
Only on Thursday, the Harmonization Committee of the National Assembly adopted a $53 benchmark from oil in the fiscal estimate. But Okogu said there was no cause for alarm, saying if the oil price eventually falls below the approved benchmark, the 2015 fiscal plan provides new innovative funding options away from crude oil revenue.
In fact, the Budget Director General revealed that in the 2015 plan, non-oil revenue was for the first time projected to be higher slightly than oil mineral revenue, which makes the plan a non-oil economy Budget.
He spoke as a development economist and social commentator, Odilim Enweagabra, listed several revenue generation sources, which the Federal Government could optimise for more revenue than crude oil is presently offering the country.
Okogu who spoke exclusively with The Guardian at the weekend declared that apart from the fresh revenue generation ideas which have been encapsulated in the plan to raise fresh revenue for the funding of the plan, the Federal Government has equally introduced belt- tightening initiatives on the expenditure side to ensure value for money, by trimming down government expenditure.
“The impact of oil price fall on Nigeria, nobody should deceive himself because the impact is significant. We had submitted a Budget to the National Assembly at $65 per barrel in December. After that we saw that the price of oil continued to decline and eventually bottomed at around &45, $46 and has recovered gradually now to around $60. We have done a new budget submission to the National Assembly and the MTEF based on $52 per barrel. I understand the two houses have harmonised it at $53 per barrel. So we are concerned in the sense that the price is roughly half of what it used to be, which is very painful to everybody. If you have a price, which is 50 per cent of what it used to be, what it simply means is that you are loosing revenue of a similar value. The point being made is that yes, the impact is severe because it’s affecting the revenue of government.”
Continuing, he said: “But as a Nation, you have got to pick up yourself, dust yourself up and you have got to move forward. If you sit on the ground and you don’t do anything and you think the world would come to your rescue, nobody will do that. If you ask all these countries suffering from the oil price fall, they are all doing one thing or the other, which is the reason, in the case of Nigeria we took steps immediately to introduce a number of measures. One of them, which we started actually before the oil price collapse, is the diversification of our revenue base. By getting the Federal Inland Revenue Service (FIRS) to work with some consultants to improve tax administration. We have a target of an extra N75 billion for 2014. What did we find? We found that people had done a N110 billion as of December, using some of the measures that they had identified and needed.
“In the current Budget we have given to the Assembly, non-oil revenue is slightly higher than oil for the first time to show you that we are transiting away from an oil-based economy to one which is non-oil. It’s a transition that we are just beginning and we are going to sustain it, having identified the various areas of the economy that need to be looked at for revenue.
Meanwhile, a Development Economist, Enweagbara, has commended the Federal Government for the initiative of diversifying the economy, and shifting from over-dependence on oil mineral revenue in the face of untapped, abundant resources in the country.
He suggested the formalization of the country’s millions of informal sector operators, the imposition of Carbon tax on all auto products , depending on their capacity to mitigate their social and pollution costs on the society daily.”
He also advocated the return of tollgates on the country’s highways for cars and trucks to pay according to the costs they impose on the roads.
Again Mr. Enweagbara spoke on other areas of revenue: “Drug tax should be imposed on all drugs consumed in the country, particularly on dietary supplements. This means that ministries of health and finance should have their price tags on all drugs sold in the country not only to create uniform price across the country but also to be able to tax the drugs sold as well as reducing drug abuses in the country.
“Lottery and jackpot tax should be imposed on lottery and jackpot operators and winners as well. Most developed economies generate a lot of revenues from lotteries and jackpots. Our capital gains tax (profit incurred by individuals or corporations on the sale of non-inventory assets, mostly realised from the sale of stocks, bonds, precious metals and properties) which is one of the lowest in the world should not only be increased from 10 per cent to as high as 40 per cent, but also should be fully enforced with high evasion cost and consequences.
“Property should be made an important source of government revenue, taxing both owners and renters of both residential and corporate property. If not for any reason, be it for providing security and policing as well as for cleaning and beautifying streets and neighbourhoods. As an important source of revenue for local authorities, property tax should however be designed in a way that discourages double taxation.
“E-collection policy as recently put in place by federal government is one of the best policies of this government.
This is because ministries, departments and agencies of government that are involved in revenue generation have been directed that all receipts by them be made directly to the Consolidated Revenue Fund (CRF) at the CBN using e-collection, an electronic channels process, which makes it difficult for revenue generating MDAs to corruptly divert public revenues collected by them. Also by closing their revenue accounts deposited with deposit money banks based on CBN directives on Treasury Single Accounts (TSA), it becomes difficult for banks to grow credit portfolios on MDAs’ corruptly diverted IGRs. With e-collection and TSA, as high as N4.13 trillion will be remitted by MDAs to CRF account of the federal government,” Mr. Enweagbara further stressed.