• Sunday, April 14, 2024
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FG targets N18trn under Revenue Initiative, expects N3.4 trn from states

Nigerian-states

The Federal government, under its Strategic Revenue Growth Initiative (SRGI), targets to generate between N13trn and N18 trillion in revenues and achieve a 15% Revenue to GDP target by 2023, Zainab Ahmed, Minister of Finance, Budget and National Planning said on Thursday.

The fedrral government also expets states, which are presently cash-straped to cumulatively generate about N3.4 trillion of the total sum.

She said that the Nigeria’s Revenue to GDP ratio at about 8 percent has remained below the continent average as well as below the ERGP target of 15 percent, and raised concerns that the country could still lag behind comparator countries unless major changes embraced in policy behavior, driven by data to purposefully target revenue generation levers.

“Apart from behavioral changes at the macro level, a data-driven approach also drives changes at the micro level, within our institutions.

“This can be in the form of plugging revenue leakages, or by identifying new sources of revenue. Let us consider these two points in turn,” Ahmed, noted, speaking at a Webinar themed, “Leveraging data to drive inclusive policy, revenue generation and improved governance” organised by the National Bureau of Statistics.

“Accurate and reliable data is also essential in plugging revenue leakages. Data is equally relevant for identifying new sources of revenue. It is not enough to simply plug leakages; new sources of revenue are a necessary complimentary strategy”.

She explained that specific efforts are on-going towards achieving the 15 percent revenue to GDP target by 2023, as well as identifying sectors of the economy that can benefit from fiscal and tax reforms, while expanding the base and rate for such taxes.

“Ultimately, the goal is to ensure that such policy decisions are driven, not by ideology, but by data”.

Citing the recent analysis by the National Bureau of Statistics which compared the contribution of various economic activities to GDP and their contribution to VAT receipts, the minister, using Q1 2020 data, noted, regrettably, that activities which constitute a large chunk of nominal GDP contribute relatively less to VAT collection.

She said “While Professional Services accounted for 22 percent of total VAT collection in Q1 2020, this activity only account for 3 percent of nominal GDP. On the other hand, Manufacturing accounted for 13 percent of nominal GDP in Q1 2020 but only 1 percent of total VAT receipts”.

“Trade appears to be one activity that contributes as much to economic output as its share of VAT receipts. This may also explain why it is a significant predictor of the direction of the economy”.

Yemi Kale, Statistician General of the Federation was of the opinion that the importance of data in nation building cannot be overemphasized as it aids effective policy making process, provide clear objectives and aid monitoring and evaluation of policies to meet desired results.

“We have realized that there are a lot of revenues out there that have not been collected as many people are still not in the tax net,” Kale noted.

Kale further noted that covid 19 which was first seen as a public health crisis has escalated into global economic crisis adding that there is need for the government to make use of data to develop framework to cushion its impact.

Sarah Alade, Special Adviser to the President on Finance and Economy, in her remarks said that data has remained an indispensable tool for development, noting that revenue to GDP ratio at 8 percent reamains far below the desired ratio of 15 percent. this, she said calls for the use of data to increase tax collection, efficiency, compliance and the overall revenue generation.

“Unless we have up to 12 percent revenue to GDP ratio, we cannot achieve the development we desire; hence we have to increase our tax collection, compliance and efficiency through the use of data”.

“Another issue we have to determine in tax revenue generation is the lack of trust between citizens and the government, we can only encourage citizens to pay tax and ensure taxes are used judiciously”.

“The Covid-19 pandemic has shown us our weakness as a nation; hence we have to develop policies to incentivize economic growth by providing opportunity to open data and using data to coordinate the affairs of the country”.