2015 Budget: FG to generate N650bn from more taxes

Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, said while giving the highlights of the 2015 yesterday that the amount would be realized from the new tax policy and a review of waivers given to some oil companies.She said due to the oil price shortfall, the country would, in the medium […]

Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, said while giving the highlights of the 2015 yesterday that the amount would be realized from the new tax policy and a review of waivers given to some oil companies.She said due to the oil price shortfall, the country would, in the medium term, focus on a tax policy “to see where opportunities lie to streamline and rationalize certain taxes and levies whist looking to boost others.”
She observed that Nigeria has one of the lowest Value Added Tax (VAT) rates in the world, which is why medium term efforts must involve the legislature to see what opportunities exist with VAT, which largely benefits the states.
“Whilst state governments get 85 percent of VAT, the federal government gets just 15 percent. A 5 percent increase in VAT rate for instance would yield N614 billion, most of which would go to the states and local governments,” she said.
She said analysis has shown that about 30 percent of those who received tax waivers from government, especially under the pioneer scheme, now abuse it, which is why government has commence the process of reviewing its implementation.
Giving further breakdown, the minister said a 10 percent import surcharge would be imposed on new private jets, which would yield an estimated N3.7 billion in 2015 and 39 percent import surcharge on luxury Yachts that is expected to rake in N1.6 billion.
She said there would be a 5 percent import surcharge on luxury cars which is estimated to yield about N2.6 billion of additional revenues, while another surcharge would be imposed on business and first class airlines tickets.
Others, she said, are “the imposition of 3 percent luxury surcharge on champagnes, wines and spirits to generate about N2.3 billion in 2015; and a 1 percent FCT Mansion Tax on residential properties with value of N300 million and above which should yield additional N360 million.”
The surcharges alone, she added, would yield a total of about N10.56 billion in 2015.
“I believe that the discipline these new measures impose will go a long way to support the economy and provide Nigeria a responsible pathway to overcoming the limitations of falling oil revenues without disproportionately affecting the poor-to-middle class.
“Based on these parameters, the 2015 Budget envisages a net federally collectible revenue of N6.9 trillion. Of this, a total of N3.6 trillion is envisaged to fund the FGN 2015 Budget, representing about 3.4% drop from N3.7 trillion for 2014 Budget. This is with more emphasis on non-oil revenue sources to partly compensate for the shortfall in actual oil revenue,” she said.