The total monthly payout by the Federation Account Allocation Committee (FAAC) to the three tiers of government declined by N115bn to N444bn (US$1.46bn) in August (from July revenues). It falls short of the projected pro rata monthly average of N477bn per the 2016 budget, which projects the net distribution from the federation account and the VAT pool combined at N5.72trn. The decline was attributed to the fact that the large annual tax payments were timely this year, and so included in June revenues distributed the previous month.
According to the permanent secretary in the federal ministry of finance, the timely payments were made both by the unincorporated oil joint-ventures (petroleum profits tax) and large non-oil firms (companies’ income tax).
The chair of the Federal Inland Revenue Service (FIRS), Babatunde Fowler, has gone on record as saying that collections were well below target in Q1 but that he was confident the service would meet the full-year projection. It was not clear whether he was referring to the service’s target of N4.9trn or the projection of N4.2trn in the 2016 budget.
The FIRS is the largest but not the only revenue collection agency. However, if it is to justify Fowler’s confidence (and he has come to the post with a proven track record from Lagos State), it will provide some relief from the impact of sabotage on oil earnings in the federation account.
The gross distribution of N269bn was supplemented by an exchange-rate gain of N70bn, unspecified arrears of N36bn from May, the regular NNPC “refund” of N6bn, excess bank charges of N1bn and VAT.
We have taken the data for the July payout from the local media and caution that there may be some inconsistencies between different accounts.
