Despite ongoing legal tussle over which tier of government to collect Value Added Tax, the Federal Government has estimated N316.69bn as its share of VAT in 2022.
The sum is part of what the Federal Government plans to fund the 2022 Budget according to the details of the Appropriation Bill sighted by our correspondent on Friday.
The Federal High Court, Port Harcourt, had on August 10 ruled that states, and not the Federal Inland Revenue Service, had the legal rights to collect VAT and income tax. The FIRS has appealed the judgment.
Meanwhile, Rivers and Lagos State Governments have since signed laws authorising states to collect VAT.
The Southern Governors Forum had in a meeting held in Enugu recently also expressed support for the collection of VAT by state governments.
Despite the development, the Federal government listed its N316.69bn share from VAT as part of its share of non-oil taxes that it plans to fund the 2022 Budget with.
The projected share from VAT is N78.2bn more than the N238.42bn share in the 2021 budget and the supplementary budget of the same year.
Still, on non-oil taxes, the Federal Government plans to get N909bn as a share of CIT; N834bn as a share of Customs; and N71.9bn as a share of Federation Account Levies.
In all, the government is targeting N2.1tn from its share of non-oil taxes as against N1.5tn in 2021.
It is also targeting N3.15tn from its share of oil revenue as against N2tn in 2021.
The government is also targeting dividends from Nigeria Liquified Natural Gas and Bank of Industry totalling N195bn.
Its share of minerals and mining is put at N2.5bn among other sources of revenue.
To tackle the revenue problem, the Federal Government said it was beginning aggressive revenue mobilisation initiatives.
As such, the minister said the government was working on a plan to sanction ministries, departments and agencies if they failed to meet up with their revenue targets.
This, according to her, will boost the revenue performance and remittance of government-owned enterprises.
“We are working to ensure that MDAs appropriately account for and remit their internally generated revenue
“GOEs’ revenue performance/remittance will be enhanced through effective implementation of the enhanced performance management framework, including possible sanctions should they default on their targets; tighter expenditure control including enforcing of Finance Act 2020 provision limiting GOEs cost-to-revenue ratio to a maximum of 50 per cent; and regular independent monitoring and reporting of revenue and expenditure performance of GOEs by both the Budget Office of the Federation and the Office of the Accountant General of the Federation,” the minister said.
She noted that the agencies were limited to spending not more than 50 per cent of what they generated.
“These agencies cannot spend more than 50 per cent of what they generate. And this is one major revenue that would be coming into the government’s treasury,” she said.
According to her, a robust monitoring mechanism has been put in place to assess the performance of the agencies.
She added that the new plan to sanction them for revenue target failure would be included in the Finance Act 2021 or as a directive from the President.
She said, “We have some provisions that we hope to make in the Finance Act that we are currently working on. But in addition to that, we also have a robust monitoring mechanism that is regular and continuous and tracking the performance and alerting these agencies where they are already falling short.
“It did not use to happen. A long time ago, people just worked and tracking was not done. By the time you make an assessment and underperformance is reported, it is already late.
“So, we are doing more constant tracking and monitoring, continuous monthly reconciliation is being done with the revenue-generating agencies and specific sanctions may be provided either in the Finance Act or be directed by the President because that is a discussion that is ongoing. And for agencies that continually default on their targets, the leadership of those agencies will have to face some consequences.”
