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FG to raise VAT, release N350billion budgeted expenditure

By on March 24, 2016

The federal government has said that it will inject N350 billion budgeted expenditure to revamp the Nigerian economy in the next few months. It will equally work in collaboration with the state governments to adopt a plan for the gradual increase of value added tax (VAT) on goods and services.

These were some of the decisions taken at the end of a two-day retreat for governors of the 36 states of the federation and members of the National Economic Council (NEC) at the Presidential Villa in Abuja.

The Nigerian economy has been hit by dwindling crude oil prices, leading to a shortage of foreign exchange, a shrinking economy and spiraling inflation, which have all impacted on the standard of living and impeded the ability of several state governments to pay the salaries of their workers.

Briefing State House correspondents at the end of the retreat, the Minister of Finance, Mrs. Kemi Adeosun, who was joined by the Minister of Budget and National Planning, Senator Udoma Udo Udoma, Zamfara State Governor, Mr. Abdul’aziz Yari and his Anambra State counterpart, Mr. Willie Obiano, said part of the funds would assist in the payment of local contractors who had laid off their staff due to lack of funds.

Adeosun said: “From the Federal Ministry of Finance, in anticipation of the approval of the budget, we have virtually lined up about N350 billion, which we would be pumping into the Nigerian economy in the coming months.

“We explained our rationale and the processes that we have put in place, safe guards to ensure that this money actually achieves the desired objective which is to stimulate the economy.
“We are already discussing with some of the contractors who would be paid these monies and the objective from the overall criteria is how many Nigerians would be re-engaged.

“We are specifically looking at contractors who have laid off staff and how many Nigerians are you going to put back to work as a result of this money that we are planning to release and we believe that this would bring significant economic activities”

She said the retreat deliberated extensively on the drop in revenue and on how it affects the state governments and their ability to pay salaries and meet other obligations.

She said: “The general resolve of the house was that there was a need to bring in more cost efficiency in their operations. In particular, to look at the setting up of Efficiency Units in the states, to rationalise expenditure and of course to increase internally generated revenue (IGR).

“To that end, there was a need to generate data because data are the basis of any revenue collecting efforts.”

Adeosun also said that the federal and states inland revenue services agreed to collaborate on joint audits on revenue, to invest in technologies and other efforts to improve collection.
According to her, there is a need to develop incentives for both federal and states revenue generating agencies to ensure that there is an alignment of interests.

She said the meeting also agreed to educate the masses on taxation in order to expand the tax base and ensure that there is a buy-in in the revenue collection agencies from the populace.
Adeosun said the meeting advised the state governors to rationalise the numbers of commissioners and general political appointees, where possible, in their states and to put in place cost control measures that would be identified and implemented on an on-going basis.

She said: “We also discussed the Universal Basic Education Fund and the need to get legislative approval to change the need for counterpart funding on the part of state governments which we feel is putting them further into debts.

“The goals are to reduce that requirement temporarily to 10 per cent from the current 50 per cent and that would release an estimated N58 billion that is currently un-accessed by the states.

“With that money, we could possibly address around 1,000 of the worst classrooms in each of the 36 states and rehabilitate them and of course this would also create jobs and stimulate economic activities.”

On the salient issues discussed and agreed to at the NEC retreat, the media aide to the vice-president, Mr. Laolu Akande, said participants set up an implementation steering committee headed by Vice-President Yemi Osinbajo.

According to Akande, the committee would oversee the work of the implementation committee and provide appropriate steers to the implementation monitoring committee to ensure that the resolutions agreed at the retreat are duly implemented.

Other members of the VP’s committee are: Abdulaziz Y. Abubakar, Chairman, Nigerian Governors’ Forum and Governor of Zamfara State; Adams Oshiomhole, Governor of Edo State; Abdulfatah Ahmed, Governor of Kwara State; Rauf Aregbesola, Governor of Osun State; David Umahi, Governor of Ebonyi State; Badaru Abubakar, Governor of Jigawa State; Mohammed Abubakar, Governor of Bauchi State; Senator Udoma Udo Udoma, Minister of Budget and National Planning;Mrs. Kemi Adeosun, Minister of Finance, Dr. Okechukwu Enelama, Minister of Industry, Trade and Investment; Chief Audu Ogbe, Minister of Agriculture; Dr. Kayode Fayemi, Minister of Solid Minerals; Mr. Babatunde Fashola, Minister of Works, Power and Housing; and Mrs. Nana F. Mede, Permanent Secretary, Ministry of Budget and National Planning, who would serve as the secretary of the committee.

Other decisions taken at the retreat were on concerted and consistent efforts to diversify revenue sources, expand compliance on VAT, and adoption of a plan for gradual increase of VAT, and increased expenditure through borrowing, which should be invested in infrastructure.

Also federal and state governments would focus on fiscal responsibility as a critical element in macroeconomic balance; increase investment in infrastructure through public private partnerships (PPP); develop financial inclusion strategies to cater for the poor and vulnerable population; and maintain a minimum level of capital expenditure of 30 per cent in the budget.

The federal government at the meeting pledged to reposition the Bank of Agriculture to enhance its capacity to finance agriculture and to get the Central Bank of Nigeria (CBN), to provide funding for agriculture.

It was also agreed that a single digit interest rate for agricultural loans should be considered, while duties and taxes for agriculture produce and equipment should be waived.
It was agreed that the federal government would develop strategic partnerships between it and the state governments.

Also agreed was that, each state should make specific commitments to growing crops in which it has a comparative advantage and request for the federal government’s intervention.
NEC also agreed that national targets for self-sufficiency in food production should be set for identified crops, which would be monitored.

In this regard, NEC set targets, stating that the country should be self-sufficient in tomato paste production in 2016, rice in 2018 and wheat in 2019.

The end of the two-day NEC retreat coincided with revelations from the National Assembly that it will pass the 2016 budget today, following which the federal legislature would embark on a two-week Easter break.

THISDAY also learnt that the budget includes a provision of N150 billion for fuel subsidy and the withdrawal of N1.5 trillion revenue from the treasury single account (TSA).
The N150 billion fuel subsidy and N1.5 trillion TSA funds are contained in the report of Conference Committee of the Senate and House of Representatives on 2016-2018 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Policy (FSP), which was also presented to the Senate yesterday.

The Senate and House Committees on Appropriation had separately laid the 2016 budget before both legislative chambers for consideration and passage today.
While the report by the Senate Committee on Appropriation was laid by committee chairman, Senator Danjuma Goje, after a motion moved by the Senate Leader, Ali Ndume, that of the House of Representatives was laid by the House Committee Chairman on Appropriation, Hon. Abdulmumuni Jibrin.

The Senate also received the harmonised report of the Conference Committee on the 2016-2018 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Policy (FSP) as presented by the Chairman, Senate Committee on Finance, Senator John Eno. Both the budget and MTEF and FSP are expected to be passed today.

After presenting the reports, both chambers adjourned their plenaries in honour of Hon. Musa Onwana of Nasarawa/Toto federal constituency who passed on last weekend.
A brief summary of the report on the 2016 budget as presented yesterday, showed that the joint Committees on Appropriation approved the total budget figure of N6,077,680,000,000 presented by the executive.

The committee also approved other major proposals as presented by the executive.
The report recommended that the executive should be authorised to draw down from the Consolidated Revenue Fund of the Federation, the total sum of N6,077,680,000,000 as approved in the 2016 budget.

The summary of the breakdown includes N351,370,000,000 for statutory transfers; Nl,475,320,000,000 for debt service; N2,648,600,000,000 for recurrent (non-debt) expenditure; N1,845,540,000,000 including N157,150,000,000 for debt service; and N86,000,000,000 as interest on capitalised loans as contribution to the development of funds for capital expenditure for the year ending December 31, 2016.

THISDAY investigations further revealed that the Conference Committee of the National Assembly on Finance approved N150 billion as subsidy for petroleum products.
A member of the committee, who spoke with THISDAY in confidence, said the conference committee was constituted because the House of Representatives failed to approve the subsidy element for fuel while the Senate approved it.

According to him, deliberations at the conference committee led to the decision to approve the recommendation by the Senate Committee on Finance.
He also disclosed that the conference committee approved N1.5 trillion for the financing of the budget from the TSA.

According to him, the House, in error, did not approve the entire N1.5 trillion from the TSA as part of the funds for financing the budget until it was agreed at the conference committee that the entire amount in the TSA could not be used for financing the budget as the ministries, departments and agencies (MDAs) also need money for their operations.

Also yesterday, the Senate received the report of the Auditor-General of the Federation, Samuel Ukura, on the N3.3 trillion audit query against the Nigeria National Petroleum Corporation (NNPC) and other agencies of the federal government.

Senate Leader, Senator Ali Ndume, had said recently that the presentation of the report of the auditor-general to the National Assembly on the Federation Account for the year ended December 31, 2014, was in accordance with Section 85(2) and (5) of the constitution.

The report, presented to the Clerk of the National Assembly, Salisu Maikasuwa, on March 7 by Ukura, indicated that several MDAs including NNPC, the management of the National Assembly and Nigeria’s mission in the United States of America had failed to remit N3.3 trillion to the treasury in 2014.

 

[ThisDay]