Large shortfall in non-oil revenue collection

Federally-collected revenues continue to run behind budget, according to data in the CBN’s monthly reports. Collection is rising but from a low base. For the 13 months through to October, total non-oil collections (gross) did not once reach the pro rata budget figure of N467bn: the closest they came was N434bn in July. The take from companies’ income tax (CIT), and customs and excise hit their targets twice and four times respectively. After statutory deductions, these revenues are transferred to the federation account for distribution to the three tiers.

  • VAT collections were steady other than a sharp increase in September (see chart), which we would expect of an economy in slow-growth mode. They have fallen consistently short of the aggressive budget of N129bn per month. We can only guess that the authorities assumed strong efficiency gains since the standard rate was unchanged, at 5%.
  • Yemi Osinbajo, the vice-president, told an investment event in London in mid-December that he favoured boosting tax collections without hiking the rates, with the possible exception of VAT. (At the same event, he said that there could be some merit in reducing the CIT rates.).
  • The Federal Inland Revenue Service (FIRS) has reported total collections, which include petroleum profit tax, of N5.30trn in 2018. While short of its target of N6.75trn for the 2018 budget year, this still surpassed its record of N5.01trn in 2012. The FIRS chairman, Babatunde Fowler, has acknowledged the support provided by data-mining carried out by the federal finance ministry with external consultants.
Federally-collected non-oil revenues (gross; N bn)

Sources: CBN; FBNQuest Capital Research
  • The 2018 budget year will probably run through to mid-2019. We are not commenting on the 2019 budget presented to the National Assembly by the president in December. Nobody can honestly say if and when it will be approved by the currently preoccupied assembly.

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