N798b VAT revenue unsettles 2018 budget projections
• ‘Low tax collection impeding Nigeria’s infrastructure financing’
The nation’s 2017 budget estimates may be faltering further with a N797.51 billion collection from Value Added Tax (VAT) in 10 months against the projected N1.73 trillion by the end of the year.
Although the figure represents N131.7 billion improvement compared to the N665.8 billion figure in the corresponding period of 2016.
Specifically, with a shortfall of N879.5 billion in 2016 VAT projection, this year’s fiscal plan is facing another failed estimation, currently at N930.49 billion in just two months to the end of the year.
The development shows that it is not yet settled with the economy and there still remain leakages and compliance challenges dogging government’s efforts to raise revenue internally.
To the Minister of Finance, Mrs. Kemi Adeosun, improving VAT and other tax collection was key to Nigeria’s revenue strategy.
She said government would extend its tax compliance campaign to the private sector and intensify efforts in ensuring that the Ministries, Departments and Agencies (MDAs) were compliant.
She said: “Revenue mobilisation is key to national growth and critical to the success of Nigeria’s economic reform agenda. We have an unacceptably low level of non-oil revenue and much of that is driven by a failure to collect tax revenues.”
Adeosun, who spoke yesterday in Abuja, revealed that the non-oil revenue represents 46.15 per cent of the 2017 VAT budget of N1.73 trillion, an increase of 19.78 per cent over the corresponding period of 2016.
The minister said the highest VAT collection of N86.71 billion was achieved in September this year, while N84.67 billion and N83.315 billion were recorded in May and October. Contrastingly, the lowest VAT earning of N69.20 billion was witnessed in March 2017.
The Federal Government gets 15 per cent of VAT revenue, while the states and local councils receive 50 per cent and 35 per cent.
Adeosun reiterated government’s commitment to aggressively grow the nation’s tax revenue base in order to drive economic growth.
She noted; “With a tax to Gross Domestic Product (GDP) ratio of only six per cent, which is one of the lowest levels in the world, we have a lot of work to do if we are going to build a sustainable revenue base that will deliver inclusive growth.”
The minister said the country’s revenue strategy to improve tax through the Voluntary Assets and Income Declaration Scheme (VAIDS) would lead to a broader tax base and more sustainable revenue for all tiers of government.
Meanwhile, the International Monetary Fund (IMF) has said low tax was accounting for government’s inability to effectively finance infrastructure.
According to information on its website, it stressed the importance of driving higher levels of payroll and accounting automation among the country’s businesses, especially small, micro and medium-size enterprises.
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