Current global trends are pointers to what could befall countries that rely solely on oil revenue. With the economic crises in western countries and the attendant thinning of their spending power, Nigeria’s fate is hanging as a degeneration of the situation in Europe and America spells doom for the nation’s economy.
In the interim however, the crude oil money can be used to open up all the 774 local government areas in the country-electricity, road, schools, hospitals, town halls, modern markets, housing schemes and huge investment in agriculture.
While the beautification of city centres and peri-urban areas is not a bad idea, massive investment in infrastructures in the rural areas is the key to the nation’s industrialization and ultimately, economic diversification.
The infrastructure will no doubt drive economic activities in these local government areas and the socio-economic impact will be huge.
Also, with economic activities come higher earning power, and the tax agencies at the various levels of government can make tax deductions for the development of more infra and superstructures.
The recent revelation by the Federal Inland Revenue Service (FIRS) that out of the N3.401 trillion it collected in the first eight months non-oil taxes recorded N1.187 trillion of the cumulative figures, while oil revenue accounted for N2.202 trillion, lending strength to the call for economic diversification through non-oil sector.
According to reports the total collection by the Federal Inland Revenue Service the first eight months of the year represents an increase in the tax revenue collection performance of N468.65billion when compared to the total collection of N2.93 trillion for the same period in 2011. The service has less than N233, 57billion to achieve government’s provisional annual estimate of the N3.6 trillion, an average monthly collection of N302.95billion set for the FIRS in the current fiscal.
At a recent stakeholders’ meetings in Asaba, Delta State and Lagos, FIRS Acting Executive Chairman, Kabir Mashi, was quoted as saying that the reforms embarked upon by the agency were showing that oil taxes were no longer commanding the height in revenue generation.
His statement came amid fears of a possible economic downturn due to the ailing European and American economies.
Mashi asserted the days of economic oil boom were were coming to an end as the non-oil taxes were giving oil and gas taxes a run for their money.
This is however not surprising given that under the 2012 fiscal plan, the agency was mandated by the Federal Ministry of Finance to significantly grow the non-oil revenue to 10 per cent of the non-oil Gross Domestic Product (GDP).
The Acting Chairman of FIRS, Mashi said: “Our total collection as at May 2012 amounted to N1.886 trillion as against the government’s target for the same period of N1.515 trillion. This translates to 125 per cent of the set target with a positive variance of N371 billion.
However, when compared with the FIRS target, we recorded a shortfall of N232.6 billion which is roughly 11 per cent. The Petroleum Profit Tax (PPT) contributed about 70 per cent of the total collection while Companies Income Tax (CIT) and the Value Added Tax (VAT) contributions were 12 per cent and 16 per cent in that order. Other tax types contributed the residue of two per cent, which is a cause for concern.
This trend is in sharp contrast with our set objective to grow the non-oil collection significantly in the year.”According to the figures, non-oil tax receipts leaped this year, rising from 26.8 per cent of total tax collections in the first quarter (Q1) to 41.29 per cent in Q2 in relation to oil and gas performance during the period under review.
In the first quarter, of a total tax generation of N1.172 trillion, oil and gas earnings accounted for N857.162 billion, representing 73.1 per cent while non-oil pooled N315.306 billion, representing 26.8 per cent.
During the second quarter, which ended in June this year, there was a leap in the performance of non-oil collection as, out of a total of N1.267 trillion, the gap narrowed with oil and gas taxes contributing N743.950 billion or 58.7 per cent while non-oil collection moved up to N523.279 billion, representing 41 per cent of the total revenue.
While the Q3 collection and analysis are still ongoing, there are indications that the trend had continued in favour of non-oil window as figures obtained for the month of July have shown a further narrowing of the margin, moving up to 42 per cent.
From the figures, of a total of N524.12 billion tax revenue as at July 2012, oil and gas tax stood at N302.37 billion, representing 57.6 per cent while non-oil taxes fetched the sum of N221.749 billion, representing 42.31 per cent.
The agency attributed the increase to the direct response to the “aggressive drive by the tax agency in recent times by our enforcement team, which is raking in a lot of revenue. In fact, there was a week we raked in over N4.2 billion. The initiative has also led to enhanced compliance by tax-payers.
And I can tell you that with the support of the Federal Ministry of Finance and the Presidency, we can make up to N15 trillion yearly if we deploy the right information technology to track the activities of contract awards by agencies of the federal and state governments as well as the activities in the property and estate sectors to effectively assess and collect taxes from operators in the industry.”
Leadership
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