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<\/p>\nEvery government depends on revenue from different sources to thrive and the Nigerian Government isn\u2019t different.<\/p>\n
Basically, revenue in terms of governance can be defined as the total annual income of the Federal, State and Local Government Council. Or it can be said to be the money that goes into the treasury from any of these sources.<\/p>\n
In this post, you\u2019ll learn how government earns revenue from different source and what the latest figures are in terms of this revenue.<\/p>\n
Let\u2019s dive right in.<\/p>\n
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In the fourth quarter of 2017, government revenues in Nigeria increased to N1096.90 billion from N883.81 billion in the third quarter of 2017.<\/p>\n
Between 2010 and 2017, the average government revenue in Nigeria is N833.09 billion from 2010 until 2017. The revenue reached an all time high of N1261.30 billion in the first quarter of 2017 and a record low of N498.54 billion in the second quarter of 2015.<\/p>\n
Generally, a substantial part of the revenue of the Federal, State and Local Government of Nigeria is realised from taxation but there\u2019s more to government earnings than just taxation.<\/p>\n
However, taxation has provided reasonable revenue from government in recent times. For instance, it was revealed that the significant increase in revenues from N415.7 billion in April to N462.4 billion naira ($1.43 billion) in May 2017 was as a result of proceeds from\u00a0corporate taxes.<\/p>\n
But there\u2019s still more to be done in this regard as there are just 2.5 million tax-registered corporates while there are 30 million on the CAC list.<\/p>\n
In terms of the relationship between tax and GDP, the data from 2008 and 2009, government revenue represented 14.6% of the country\u2019s GDP while in 2000 the revenue was at an all-time high of 20% of the GDP.<\/p>\n
In 2016, the Federal Government received revenue of $3.3 trillion which comprise 17.8% of the country\u2019s GDP.<\/p>\n
Over the last 50 years the Federal revenue has hovered between 17.4 and 20% of the country\u2019s GDP.<\/p>\n
In 2017, the country recorded a low tax-to-GDP ratio which was said to be one of the lowest in the world at 6%.<\/p>\n
This isn\u2019t encouraging when looking at growing the economy. However, the Federal Government is looking to double this figure over the next couple of years.<\/p>\n
Generally, taxes are supposed to be a huge source of internally generated revenue for the government of Nigeria but there are multifaceted problems ranging from corruption, embezzlement, poor financing, mismanagement of funds and poor leadership that have directly and indirectly affected taxation.<\/p>\n
As a result of this low tax revenue mobilization, the government of Nigeria has been unable to finance major government projects.<\/p>\n
Here\u2019s a quick recap of the problems that have plagued the tax mobilization system: tax evasion, tax avoidance, poor accountability, lack of awareness of the general public on the imperatives and maximum benefits of taxation, corruption of tax officials, connivance of taxing officials with taxing population and poor method of tax collection, etc.<\/p>\n
The tax collection in Nigeria is a far cry from what is obtained in developed countries like the US and UK. For example, in the US, individual income tax has been the largest single source of federal revenue since 1950.<\/p>\n
Notwithstanding, tax revenue still plays a part in economic growth in \u00a0the country; especially in terms of oil and non oil tax revenue which has contributed 75% and 25% shared in total revenue between 1986 and 2015.<\/p>\n
Additionally, oil and non oil tax revenue has contributed 7.7% and 2.5% for the 1986-2015 to the GDP which means economic growt can be directly linked to these revenues.<\/p>\n
Custom duty is another type of tax that has benefited the economy. At the close of 2017, revenue generation by the Nigeria Customs Service stood at N1.037 trillion which was higher than the country\u2019s anticipated target by 27%.<\/p>\n
Overall, government revenue can be divided into oil revenue and non-oil revenue and these have been highlighted below:<\/p>\n
These include:<\/p>\n
The country earned N224.9 billion from petroleum profit tax (PPT) and royalties from the oil and gas sector in January and February 2017.<\/p>\n
Based on the CBN data for February 2017, the country\u2019s total earnings from the oil and gas sector in the month of February 2017 at N292.8 billion, rising by 37.92% from N212.3 billion recorded in the previous month.<\/p>\n
This report revealed that earnings in February from PPT and royalties from the oil and gas sector which stood at N120.1 billion, appreciated by 14.6% from N104.8 billion recorded in January 2017.<\/p>\n
These include:<\/p>\n
These are taxes indirectly imposed on consumer goods. Examples of indirect taxes include: customs and excise tax, sales tax, expenditure tax amongst others.<\/p>\n
Some of these sources of indirect taxes have been highlighted below:<\/p>\n
These are taxes imposed on commodities produced locally. Excise duties are imposed on selected commodities, such as: alcohol, petroleum products and tobacco. The duties are discriminatory in character and are usually imposed on an ad volarem basis. Excise duties are sometimes imposed to protect infant industries from foreign competition.<\/p>\n
This is one of the oldest devices used in collecting revenue. It is the fee charged on the movement of goods across the nation\u2019s borders.<\/p>\n
There are two types of custom duties. These are the Export and Import duties<\/p>\n
This is another effective way of earning internally generated revenue by the government of Nigeria. This tax has a wide coverage and it is usually imposed on the basic necessities of life.<\/p>\n
For goods with inelastic demand, sales tax is a reliable source of revenue. Also, this type of tax is an effective tool for controlling inflation in the country.<\/p>\n","protected":false},"excerpt":{"rendered":"
Every government depends on revenue from different sources to thrive and the Nigerian Government isn\u2019t different. Basically, revenue in terms … <\/p>\n