Sharp fall in company income tax triggers decline in govt’s July revenue by N183.26bn

Due largely to sharp fall in Company Income Tax, revenue earnings accruing to the federation account from oil and non-oil sources recorded a decline of N183.26bn, from N570.58bn received in the month of June to N387.31bn in July.

The Gross statutory revenue was put at N387.31 billion, while the VAT was N80.53 billion. Therefore, combined revenue decline meant that the total allocation to the three tiers of government fell from N652.2bn in June to N467.85bn in July.

These figures were revealed in a communiqué issued on Tuesday by the Federation Account Allocation Committee (FAAC) at the end of its meeting which held at the headquarters of the Ministry of Finance, lasting about four hours.

The communiqué which was signed by the Accountant General of the Federation, Ahmed Idris, was read by the Permanent Secretary, Federal Ministry of Finance, Mahmoud Dutse.

Dutse stated that the decline in revenue was caused by a drastic fall in earnings from Company Income Tax due to the expiration of the deadline for filing tax returns.

He noted that while oil revenue recorded an increase of $62m due to the rise in export sales, same could not be said of non-oil revenues.

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The communiqué read in part, “The gross statutory revenue of N387.31bn received for the month was lower than the N570.58bn received in the previous month by N183.26bn.

“The increase in the average price of crude oil from $50.27 to $51.05 per barrel and a significant increase in export volume by 1.2 million barrels resulted in increased revenue from export sales for the federation by $62m.

“Despite the increases, there were issues of leaking flow lines, shut-ins and shutdowns at terminals for maintenance.

“There was a drastic fall in revenue from Companies Income Tax due to the expiration of deadline for filing returns.”

A breakdown of the allocation showed that the Federal Government received N193.04bn; states N130.69bn; local governments N98.01bn; while N31.59bn was given to the nine oil-producing states based on 13 per cent derivation principle.

Dutse put the balance in the Excess Crude Account at $2.3bn.

Reacting to the drop in allocation, the Chairman, Forum of Finance Commissioners, Mahmud Yunusa, expressed disappointment over the development, adding that the time had come for states to begin to look inwards in order to boost revenue.

He said, “States will explore other options of revenue to depend less on revenue from the centre. We need to block leakages in revenue and come up with reforms to shore up revenue.

“We are also working on cost of running governance and any cost that is not necessary in running government needs to be reduced.”

He noted that reforms were currently being implemented in states to enhance revenue collection processes.

 

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