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IMF: Increase tax rate to manage fiscal crisis?

Nigeria’s tax revenue to GDP ratio remains one of the smallest in the world which implies there exists a strong revenue potential from taxes.

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IMF, tax, rate, Buhari’s Budget of Sustaining Growth & Job Creation (Full text), Nigeria generates N1.36 trillion from corporate tax, others as oil revenue drops , Nigeria-Algeria highway gets Buhari's approval , Earnings from rich petroleum resources not enough to cater for Nigeria – Buhari , Tax: Buhari appoints Muhammad Nami as FIRS boss, Subsidy economics

Despite our contrarian view on IMF’s recommendation, we agree that Nigeria’s debt position puts the economy at the edge of a fiscal crisis if the government does not find ways to manage its fiscal position. Nigeria’s tax revenue to GDP ratio remains one of the smallest in the world which implies there exists a strong revenue potential from taxes.

However, we believe this should be achieved by expanding the tax net rather than raising tax rates. Tax evasion still remains prevalent in Nigeria.

 

We believe improved transparency and efficiency in the tax collection process would also provide a significant boost for government revenue given that many people and institutions are still outside the tax net.

Finally, we believe the Federal Government needs to rein in on its “wishful” spending habits. The irony of having one of the highest cost of governance in a country where many live under extreme poverty conditions continues to impact on recurrent spending.

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[READ ALSO: Telecommunications: 5G Technology]

Furthermore, attempts by the government to bear a significant portion of the burden of bridging the infrastructure gap is unhealthy for its finances. In our view, the federal government needs the back seat as a policymaker and regulator while creating policies that will encourage the influx of private capital into sectors where key infrastructure needs revamping.

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_______________________________________________________________

CSL STOCKBROKERS LIMITED CSL Stockbrokers,

Member of the Nigerian Stock Exchange,

First City Plaza, 44 Marina,

PO Box 9117,

Lagos State,

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NIGERIA.

[READ MORE: Trade: Customs ban imports and exports via land borders]

 

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After 22 years, NBS is set to commence National Business Sample Census

The National Business Sample Census is expected to commence on October 12 2020, and end on December 12 2020.

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Dr Yemi Kale, National Bureau of Statistics, NBS, Federation Account Allocation Committee, FAAC

The National Bureau of Statistics, with the support of the World Bank, has commenced the process of implementing the 2020 National Business Sample Census (NBSC) in Nigeria. This is exactly two decades and two years after the last business census of establishments in the country.

This disclosure was stated in a circular signed by Ichedi, Sunday Joel, Head, Public Affairs & International Relations Unit, which was released by the Statistician-General of the Federation this morning.

The Survey which is coming after a similar one conducted twenty-two years ago (1997/98) is necessary, especially now that the current government is re-structuring the economy for faster growth through support to Small, Medium and large-scale enterprises, in order to increase their productivity.

The National Business Sample Census is expected to last two months from October 12 to December 12.

The main objectives of NBSC includes:

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• To compile, frame, and develop instruments and concepts, establish standards and methodology for industrial and business surveys in Nigeria.
• To serve as a benchmark for updates of subsequent commercial and industrial sector statistics.
• To develop a national directory of commercial and industrial business establishments, with all their associated social and economic characteristics
• To provide the country with comprehensive and detailed information about the structure of the Nigerian economy.

The Census will cover all the thirty-six (36) states of the Federation and FCT, with establishments in all economic sectors involved in the exercise.

For the avoidance of doubt, the establishments to be covered should have a fixed structure and location, a separate shop with a different entrance, and enclosed from dwelling place (in the case of residential areas), shops should have locks and keys for a market setting. While kiosks and shops under the umbrella are not to be listed during the census.

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All commercial and industrial businesses in each LGA will be identified and listed by the state. Name, location address, postal address, phone number, email address, year of commencement, number of activities engaged in, main type of activity, and others are questions that will be asked.

NBS enumerators with customized T-Shirts and Face Caps will visit your establishment, at any date within the stipulated period, to collect necessary information for the census. Please oblige them with the information, as your cooperation is germane towards the successful execution of the census exercise.

However, the Bureau wishes to assure you that any information given will be kept in absolute confidentiality, and will not be divulged to a third party.

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Business

These industries drove business activities in September

The development indicates recovery as manufacturers continue to benefit from the ease of the lockdown.

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Nigeria’s manufacturing sector contracts for 5th consecutive month – CBN , To test FX market, CBN pumps $50 million, CBN issues guidelines to Finance Institutions on establishment of Subsidiaries and SPVs, CBN injects $2.63 billion to defend naira in one month, CBN’s COVID-19 N50 billion targeted credit facility, CBN’s heterodox policies buoys credit growth, These industries drove business activities in September

Despite the fact that the Central Bank of Nigeria (CBN) declared last Wednesday that the nation’s Manufacturing Purchasing Managers’ Index (PMI) contracted at 46.9 index points, some industries still drove business activities in September.

The industries are Electrical equipment, up from 33.3 index points in August to 66.7 index points; Transportation equipment from 53.8 to 58.1; and Paper products from 44.4 to 50 within the same period.

Though, the Cement industry and non-metalic mineral products dropped from 64.4 to 58.1 and 66.0 to 50.6 index points respectively, the sub-sectors still contributed to the business activities recorded in September.

This was disclosed by the apex bank in its September PMI report released on Wednesday.

Nairametrics had earlier reported that manufacturing PMI for August stood at 48.5 index points, indicating contraction in the sector for the fourth consecutive month.

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READ: Can a lower MPR rate really prevent this recession?

Also, out of the 14 surveyed subsectors, 5 sub-sectors reported expansion (above 50 index points thresholds), while the others contracted.

Meanwhile, the production level index for the manufacturing sector indicated contraction in September 2020 for the fifth consecutive month, as well as Employment level and Raw material inventories.

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However, the manufacturing supplier delivery time index stood at 53.5 points in September 2020, indicating faster supplier delivery time for the fifth time.

(READ  MORE: Manufacturing: Momentum in activities slows in January)

Is the nation coming out of the woods?

Though CBN revealed that only 4 sub-sectors reported expansion in September, contrary to the 6 sub-sectors recorded in August, it is imperative to note that this is an improvement when compared to manufacturing activities in May and June, or the performance in July which saw 12 sub-sectors decline, with one reporting no change, while one expanded.

The impressive performance of cement and other sub-sectors, according to the manufacturing PMI report, is attributable to the expansion in production, new orders, employment, and raw materials’ inventories.

READ: CBN’s Manufacturing PMI up to 58.2 points in October 

A cursory look at the financials of key players in the industrial goods sector showed that despite the increased cost of higher energy pricing and adverse COVID-19 impacts on transport and naira devaluation, key cement manufacturers still recorded increased topline, driven by demand surge from domestic cement sales.

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Back story: Nairametrics had reported on Wednesday that 9 subsectors reported contraction (below 50% threshold) in the reviewed month in the following order:

  • Petroleum & coal products
  • Primary metal
  • Furniture & related products
  • Printing & related support activities
  • Food, beverage & tobacco products
  • Textile, apparel, leather & footwear
  • Chemical & pharmaceutical products
  • Fabricated metal products and
  • Plastics & rubber products

READ: Can a lower MPR rate really prevent this recession?

The Non-manufacturing sector PMI stood at 41.9 points in September 2020, indicating contraction in nonmanufacturing PMI, for the sixth consecutive month.

In all, the development indicates recovery as manufacturers continue to benefit from the ease of the lockdown.

However, conditions within the domestic economy remain relatively tight, reflecting continued uncertainties as investors remain cautious of the lingering risk of the pandemic.

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NLC, TUC suspend nationwide strike

Hike in electricity tariff to be suspended for 2 weeks, while new pump price of petrol remain unchanged.

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Ayuba Wabba, Why the FG should reverse 6% tenancy, lease stamp duty - NLC

The Nigerian Labour Congress (NLC) and the Trade Union Congress (TUC) have suspended the planned nationwide strike and protest that was to commence on Monday, September 28, 2020, over the recent hike in electricity tariff and petrol pump price.

This follows the agreement reached between the Federal Government and the organized labour during the meeting held by both parties which started on Sunday night and dragged on till the early hours of Monday morning.

The disclosure was made by the Minister of State for Labour and Employment, Festus Keyamo, through a tweet post on his twitter handle.

READ: Electricity tariff increase is suspended for 2 weeks

In the agreement between the Federal Government and organized labour, the hike in electricity tariff is to be suspended for a period of 2 weeks, while the new pump price of petrol is to remain unchanged.

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According to the agreement, which was seen by Nairametrics, both parties agreed to set up a technical committee on Electricity Tariff reforms, comprising Ministries, Agencies, Departments, NLC and TUC, which will work for a duration of 2 weeks with effect from Monday, September 28, 2020, to examine the justification of the new policy in view of the need for the validation of the basis for the new cost-reflective tariff.

This is due to the conflicting field reports which appear different from the data presented to justify the new policy by NERC, metering deployment, challenges, timelines for massive rollout.

READ: FG earmarks $1.6 billion for sea-port construction 

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The technical committee is to be headed by the Minister of State for Labour and Labour, Festus Keyamo.

Other members of the committee include the Minister of State Power, Godwin Jedy-Agba, Executive Chairman, National Electricity Regulatory Commission (NERC), James Momoh, Special Assistant to the President on Infrastructure, Ahmad Zakari as the Secretary.

Also in the committee are Onoho’Omhen Ebhohimhen, Joe Ajaero (NLC), Chris Okonkwo (TUC) and a representative of electricity distribution companies.

READ: Aviation Unions threaten to shut airspace on Monday, as NLC insists on strike

The terms of reference for the technical committee include;

  • To examine the justification for the new policy on cost-reflective electricity tariff adjustments.
  • To look at the different Electricity Distribution Companies (DISCOs) and their different electricity vis-à-vis NERC order and mandate.
  • Examine and advice government on the issues that have hindered the deployment of the 6 million meters.
  • To look into the NERC act under review with a view to expanding its representation to include organized labour.

Explore Economic and Financial Data on the Nairametrics Research Website

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