Fowler replies COS Query on Decline of Revenue Collection

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Babatunde Fowler
Fowler

THE federal Inland Revenue Services, FIRS, collected a total of N12.656.30 trillion between 2016 – 2018 compared to 14,527.85 trillion collected between 2012 and 2014,

Tunde Fowler, executive chairman of the FIRS stated this in the reply to the Abba Kyari, chief of staff to the President, letter dated August 8, 2019, asking him to explain the difference between budgeted revenue and actual collection since 2016 to 2018.

Fowler submitted a comprehensive variance analysis between budgeted and actual collections for each main tax for the period 2012- 2018 as requested.

Part of the letter reads: “Your letter stated that actual collections for a three-year period were significantly worse than what was collected between 2012 and 2014. Total actual collection for the said period was N14,527.85 trillion, while total actual collection between 2016 to 2018 was N12,656.30 trillion. The highlight of these collection figures was during the period of 2012 to 2014, out of the N14,527.85 trillion, oil revenue accounted for N8321.64 trillion or 57.28 percent while non-oil accounted for N6,206.22 trillion or 42.72% and during the later period of 2016 to 2018 out of the N12,656.30 trillion, oil revenue account for N5,145.87 trillion or 40.65% and non-oil revenue accounted N7,510.42 trillion or 59.35%. FIRS management has control of non-oil revenue collection figures while oil revenue collection figures are subject to more external forces as highlighted below.

“From the above, the non-oil revenue collection grew by N304,20 trillion or 21% within the period 2016 to 2018.

“Kindly note that the total budget collection figure during 2012 to 2014 stood at 12,190.52 trillion compared to N16,771.78for the period 2018 which represent an increase of 37.58%.

“However, going by all non-oil tax types there has been an increase as follows:

Tax Type                              2012 to 2014 (Nb)                             2016 to 2018

CIT                                          2,957.50                                               3,488.90

Gas Income                               35.18                                              186.68

Capital Gains Tax                     31.20                                              115.17   `

Stamp Duty                             25.92                                                30.63

VAT (Non-Import &Import) 2,316.19                                       2,908.57

Education Tax                         657.39                                       2,908.57

NITDEF                                          28.88                                       28.72

 

“Please note that the variance in the budgeted and actual revenue collection performance of the service for the period 2016 to 2018 was mainly attributed to the following reasons:

“The low inflow of oil revenue for the period especially Petroleum Profit Tax, PPT, was due to fall in price of crude oil and reduction of crude oil production. Notwithstanding government efforts to diversify the economy, oil revenues remains an important component of total revenues accruable to the federation. The price of crude oil fell from an average of $113.72, $110.98 and 100.40 per barrel in 2012, 2013 and 2017. There was also a reduction in crude oil production from 2.31mbpd, 2.18mpd and 2.20mpd and 2.20mbpd in 2012, 2013 and 2014 to 2.13mpd and 1.88bpd in 2015, 2016 and 2017, respectively.

“The Nigerian economy also went into recession in the second quarter of 2016 which slowed down general economic activities. Tax revenue collection (CIT and VAT) being a function of economic activities were negatively affected but actual collection of the above two taxes were still higher in 2016 to 2018 than in 2012 to 2014. During the years 2012, 2013 and 2014, GDP grew by 4.3%, 5.4% and 6.3% while in 2015, 2016 and 2017 there was a decline in growth to 2.7%, -1.6% and 1.9% respectively. The tax revenue grew as the economy recovered in the second quarter of 2017.

“It is worthy of note that strategies and initiatives adopted in collection of VAT during the period2015 – 2017 led to approximately 40% increase over 2012 – 2014 collections. In 2014 the VAT collected was N802billion compared to N1.1 trillion in 2018. This increase is attributable to various initiatives such as ICT innovations, continuous taxpayer education, taxpayer enlightenment, etc embarked upon by the service.

“Furthermore, it is pertinent to note that when this administration came on board in August 2015, the target for the two major non-oil taxes were increased by 52% for VAT and 45% for CIT. Notwithstanding the increase, FIRS has in line with the Federal government’s revenue base diversification strategy has grown the non-oil tax collection for 2016 – 2018 is compared to that of 2012 – 2014.

“I am confident that our current strategies and initiatives will improve revenue collections and meet the expectations of government.”

– Aug. 20, 2019 @ 9:25 GMT |

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