2016 budget: FIRS targets non-oil sector
As the debate for alternative sources of revenue to fund the 2016 budget deeps, the Federal Inland Revenue Service, FIRS, has given the assurance that it will generate N4.695 trillion from the non-oil sector to finance the budget.
Executive chairman of the FIRS, Mr. Babatunde Fowler, who gave the assurance at the 2016 Annual Corporate Strategy Retreat of the service, said a total of N2tn is expected to be generated from Value Added Tax, while N1.87tn to be generated from companies’ income tax.
An additional N800bn will be generated from the petroleum profit tax and another n180bn from education tax and the national information technology development fund’s N20bn.
According to Fowler, “We have proposed a revenue target of N4.957tn for 2016. This target is largely dependent on non-oil collections and in particular, VAT will account for N2tn while CIT is expected to account for N1.87tn.
“Between them, these two taxes are expected to provide almost 80 percent of our collection in 2016. We therefore have our work cut out and there is no room for complacency.”
Expressing his displeasure over the inability of the FIRS to collect the N4.57 trillion target of 2015, the chairman said the service generated N3.743 trillion due to significant drop in oil taxes, just as it was short of meeting the target for non-oil taxes, VAT and CIT.
Fowler disclosed that from the VAT, the sum of N767.33bn was generated out of a revenue target of N1.28tn, out of a target N1.48tn for PPT, N1.28tn was generated while in the area of CIT, N1.29tn was collected from the target of N1.51tn.
The former Lagos state tax administrator however expressed confidence that FIRS in 2016 would not only meet the revenue target but surpass it.
In his remarks at the event, Minister of Budget and National Planning, Udo Udoma, said the reforms being carried out in agencies of government have provided a platform to generate additional revenue from non-oil sources.
The minister, who was represented by the permanent secretary in the ministry, Mrs. Fatimah Nana Mede, said Nigeria is yet to take advantage of its size as the largest economy in Africa to generate enough revenue from non-oil sources as Nigeria’s tax to GDP ratio still falls below global average.
He said increased non-oil revenue would be achieved through multi-faceted channels, including a comprehensive audit, compliance to spending guidelines by Government Owned Enterprises, GOEs, with a view to enhancing independent revenue remittance from N489.29 billion in 2015 to N1.5 trillion in 2016.
Other avenues include the full implementation of the Treasury Single Account to generate N900 billion operating surplus from the Central Bank of Nigeria, Nigerian National Petroleum Corporation and the Nigerian Maritime and Safety Agency, NIMASA.
He said Nigeria will also look at broadening tax base and improving efficiency in tax refined collection expected to raise VAT collection to N1.42 trillion in 2016 from N1.34 trillion in 2015 and funds recovery in the region of N162.43 from NPDC.