- 2018 budget: FG Targets N311bn From Asset sale, Privatisation
The Federal Government is aiming to generate of N311bn from privatisation of public properties and the sale of national assets next year to partly finance the 2018 budget.
This is contained in the 2018 budget proposals submitted last Tuesday to a joint session of the National Assembly by President Muhammadu Buhari.
The Minister of Budget and National Planning, Udo Udoma, during a public presentation of the 2018 budget proposals in Abuja on Tuesday, stated that the sum of N306bn was being expected from privatisation proceeds, while the balance of N5bn would come from the sale of government assets.
Present at the event were the ministers of Education, Adamu Adamu; Finance, Mrs. Kemi Adeosun; Information, Alhaji Lai Mohammed; Petroleum Resources, Dr. Ibe Kachikwu; and the Head of the Civil Service of the of the Federation, Mrs. Winifred Oyo-Ita, among others
Udoma said the amount was part of the financing items of N6.6tn that would be used to fund the 2018 budget of N8.6tn.
Giving a breakdown of the expected sources of revenue, he stated that crude oil would contribute 37 per cent of the total revenue for the budget, adding that Companies Income Tax, Value Added Tax and customs duties would account for 12 per cent, 3.1 per cent and 4.9 per cent, respectively of the projected revenue for the 2018 fiscal year.
Others are recoveries, 7.8 per cent; tax amnesty, 1.3 per cent; signature bonus, 1.7 per cent; Joint Venture equity restructuring, 10.7 per cent; grants and donor funding, three per cent; and others, 5.5 per cent.
Udoma said the 2018 revenue projection reflected new funding mechanism for Joint Venture operations, allowing for cost recovery in lieu of the previous cash call arrangement.
He added that there would be additional oil-related revenues, including royalty, new marginal field licences, early licensing renewals and a review of fiscal regime for oil production sharing contracts.
According to him, the government is restructuring its equity in the JV oil assets, adding that the proceeds would be reinvested in other assets.
In addition, the minister said there were plans to increase excise duty rates on alcohol and tobacco, noting that this would help improve the revenue performance of the government.
Providing insights into the revenue performance of the 2017 budget, Udoma stated that oil revenue as well as that of the Nigeria Customs Service performed according to their respective targets.
For instance, he said the sum of N1.6tn was earned from oil between January and September, while the revenue generated by the Customs was N207bn out of the N208.17bn pro-rated as of the end of September.
This, he noted, was a performance of 99 per cent for the NCS.
He put collections from Companies Income Tax and Value Added Tax at N407.59bn and N95.57bn, respectively, adding that this implied revenue performance of 67 per cent and 53 per cent, respectively of the pro-rated budget.
Udoma, however, lamented that independent revenue did not perform according to target as only N155.14bn, which was just 20 per cent of the target, was remitted by agencies of government.
He said as a result of the poor performance of the agencies, the Federal Government was considering a review of their operational efficiency to make them more fiscally responsible.
The minister stated, “Despite the delay in the passage of the budget, we have been able to spend N450bn as of October 31, 2017. As a result of the challenges in the economy, our growth target for 2017 is revised downwards from 2.19 per cent to 1.5 per cent.
“Engagements are continuing with stakeholders in the Niger Delta to ensure stability in oil production. Efforts are also ongoing to ensure that all taxable Nigerians and companies comply with the legal requirements to declare income from all sources and remit taxes due to the appropriate authorities.
“In addition, we are working to improve government-owned enterprises’ revenue performance by reviewing their operational efficiency and cost-to-income ratios, and generally ensuring they operate in a more fiscally responsible manner.”
On the focus of the 2018 budget, the minister said the government would continue to spend more on ongoing infrastructure projects that had the potential for job creation and inclusive growth.
He added that the Federal Government would continue to leverage private capital and counterpart funding for the delivery of infrastructure projects.
The minister said for the 2018 capital projects, the government would carry out huge projects in transportation; power, works and housing; health; water resources; agriculture and rural development; mines and steel development; industry, trade and investment; and education, among others.
For instance, he said N35.4bn had been set aside for the Federal Government’s National Housing Programme; N10bn for the Second Niger Bridge; N294bn for construction and rehabilitation of major roads nationwide; N8.9bn for procurement of vaccines; and over N50bn for water supply, rehabilitation of dams and irrigation projects nationwide.
Udoma added that N25.1bn had been earmarked for the promotion and development of value chains across 30 different commodities; N4bn for agri-business and market development; N46.3bn for special economic zone projects across the geo-political zones to drive manufacturing and exports; and N19.28bn in form of tax credit to support export through the Export Expansion Grant, among others.
He added, “Our journey out of recession has helped us rest our priorities and to focus on more reforms and activities that have both short and long-term bearings on sustainable economic growth. Already, diversification efforts are yielding positive results with significant growth in the non-oil sector.
“Government will continue to create the enabling environment for the different sectors to increase their investments and contribute significantly to job creation and economic growth. The goal of the 2018 budget is to consolidate the gains recorded so far by this administration and ensure that all Nigerians benefit from economic progress.”
Also speaking at the event, Adeosun stated that the government would continue to come up with reforms that would boost tax revenue.
She stated that the current administration did believe in granting tax waivers to businesses, noting that rather than giving waivers, it was working on how to make the investment climate friendlier for enterprises to thrive
The Finance minister blamed the country’s low tax paying culture for the failure of previous administrations to emphasise the collection of taxes because of the huge money that the country was making from oil revenue.
She said now that oil revenue was no longer coming like it was in the past, there was a need to look inwards on how to raise the country’s tax to Gross Domestic Product ratio above the current six per cent.
Adeosun lamented that out of the estimated 69 million working population in the country, only 14 million of were actually paying taxes, a situation she described as unacceptable.
She said many high net-worth individuals were not paying taxes, stating that this was what made the government to come up with the nine-month amnesty window under the Voluntary Asset and Income Declaration Scheme.