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2014: FG targets N1.83tn from taxes

By on December 9, 2013

The Federal Government has projected to earn N1.83tn from tax collections in the 2014 fiscal year.

The figure was contained in the Medium Term Expenditure Framework and Fiscal Strategy Paper of the Federal Government covering the 2014-2016 fiscal period.

A copy of the document was obtained by our correspondent in Abuja on Friday.

The document fulfils a requirement of Section 11 of the Fiscal Responsibility Act 2007 which stipulates that the Minister of Finance shall prepare the MTEF and FSP and get them approved by the Federal Executive Council and the National Assembly.

According to the document, the N1.83tn tax revenue will be collected from two main tax items – Corporate Tax (N986.3bn) and Value Added Tax (N845.4bn).

A breakdown of the corporate tax of N986.3bn in the document indicated that the sum of N967.58bn will be collected from Companies Income Tax; N8.5bn will be earned from Stamp Duties while the balance of N10.2bn will be realised from Capital Gains Tax.

The report, however, said the 2014 revenue for the non-oil sector would be slightly lower based on conservative assumptions due to challenges of revenue collection in various parts of the country.

It said, “These projections were made taking into account the various measures to improve non- oil tax revenue, including improved compliance and enforcement activities; launching of the National Tax Policy; implementation of the Integrated Tax Administration System project; commencement of full self-assessment regime for all taxpayers; increased deployment of ICT; and stepping up of anti-smuggling activities by the Customs Service.

“However, for 2014, we have projected a slightly lower aggregate non- oil revenue based on conservative assumptions due to challenges of revenue collection in various parts of the country.

“However, determined efforts are ongoing to address the situation and the impact of government’s fiscal policies that have reduced the importation of goods like rice; and zero duty for equipment for agriculture and power.”

In addition, the report indicated that the delay in passing of the Petroleum Industry Bill might be affecting the auctioning of new oil acreages with the resultant non-realisation of signature bonuses, which are part of the financing items.

Going forward, it said, the government would work towards sustaining the increase in contribution of tax revenue to the budget through continuous reforms to modernise and further improve tax administration.

Meanwhile, the National Institute of Social and Economic Research has called for a review of the Companies Income Tax Act.

The call for the review was contained in a policy recommendation made by the institute to the National Economic Council.

NISER is the socio-economic think-tank of the Nigerian government which conducts research to facilitate informed policy making towards sustainable national development.

The policy recommendation was made available to our correspondent in Abuja on Friday after the institute’s second national policy dialogue on social development.

It said there was the need to review the CITA in order to give states the power to assess and collect taxes from companies registered in their domain.

It said, “The CITA should be reviewed to give states the power to assess and collect this tax from companies registered in their domains.

“Apart from boosting state government revenue, it may encourage states to aggressively seek for real investments rather than depending on allocations from the federation account.”

The Director-General, NISER, Prof. Olufemi Taiwo, on the report, said there was the need for the Federal Government to discontinue certain taxes that hurt business and industrial performance in Nigeria.

Some of the taxes which the report listed should be scrapped are education tax, fuel tax, police tax, health tax, and social responsibility tax.

These, it said, were potentially harmful to business and industrial performance.

NISER noted that the recent adoption of the International Financial Reporting Standards presented challenges for achieving the goal of creating a tax-friendly environment for business enterprises and international investors.

However, the institute argued that state governments would need to quickly key into the new system by asking their tax payers to make changes to the preparation of financial records and presentation of financial statements.

NISER added that since one tenet of a good tax system was convenience, full automation of tax administration and compliance processes should be accomplished by state governments to reduce compliance burden.

Tax compliance, the institute said, should be simplified to remove human interaction element that exposed tax officials to corrupt practices.

In addition, the unique Taxpayer Identification Number, it noted, should be brought into states’ tax systems with a view to simplifying tax compliance by ensuring that withholding tax credits were automatically credited to tax payers’ records.

[Punch]