Nairametrics| The Federal Government will grow the contribution of tax to GDP from 6% to 15% under the new Economic Recovery and Growth Plan ERGP, released yesterday.
Here is a copy of THE ERGP
To achieve this, the government will increase the tax base, raising VAT for luxury items from 5% to 15% from 2018, whilst also improving Company Income Tax and VAT compliance to raise N350 billion every year. It will also conduct a broad audit campaign to identify under-filing tax payers; improve tax compliance by engaging non-compliant taxpayers and making them comply; and formalize businesses in the informal sector. The government said it will also review key incentives such as the automobile, Export Expansion Grant, mining and hotel incentives.
Yesterday, FIRS chief Babatunde Fowler announced that it raised N27 billion through its tax amnesty program and added 814,000 companies in its tax net as a result of a nationwide taxpayer registration drive.
With this new economic plan, the Federal Government has signaled its move away from oil, as it plans to reduce its stake in JV oil assets and other oil and non-oil assets.
To replace this, it will focus on agriculture as a priority area, which it plans to grow by 6.9% per year, and the non-oil sector. The government plans for Nigeria to become a net exporter of rice, tomatoes, vegetable oil, cashew nuts, groundnuts, cassava, poultry, fish and livestock. It wants the nation to become self-sufficient in tomato paste by 2017, rice by 2018, and wheat by 2020.
Concerns had been raised over the government’s ability to revive the non-oil sector, following the difficulty real sector businesses face in the Nigerian environment. But the Acting President, Yemi Osinbajo has given a lot of hope, especially with the impressive pace at which he goes about the business of the Presidency, and with his eagerness to include the private sector in his plans.
The ERGP was expedited by this same disposition, through very robust consultations and feedback from several key stakeholders.
Among others, the government aims in this new plan, to reduce the extent to which it borrows from the local economy, and instead, borrow more from international sources, in order for more capital to be available for domestic businesses.
All these are fiscal stimulus measures which will help to reflate the economy.
The government is also mulling “The Zero Oil Initiative”, with which it aims to boost the supply of foreign exchange from non-oil sectors, by driving growth through export policies for 11 major products that could generate up to $30 billion a year. The products are cotton, rice, leather, gold, soya, sugar, cocoa, petrochemicals and fertilizer, palm oil, rubber, and cement.
Highlights of the plan :
- The Government expects Real GDP growth rate of 2.19% in 2017 from a negative rate of 1.54% in 2016 . Government expects Nigeria to be back on the growth path and out of recession by year end.
- Increase Tax to GDP ratio from the current rate of 6% to 15%. This implies earning over N10tr in taxes annually, up from an annual average of N4 trillion in the last 5 years.
- Restore oil production to 2.2 mbpd in the short term and 2.5mbpd by 2020. Nigeria ended 2016 with an oil output of 1.8 Mbpd. Analysts believe achieving over 2mbpd will require relative peace in the Niger Delta.
- Reduce petroleum products importation by 60% in 2018 and become a net exporter by 2020. This suggest the government is relying heavily on the coming on stream of the Dangote Refinery as well as approving modular Refineries currently operating illegally in the country. Government also expects the 4 existing Refineries to be back on stream
- Achieve self sufficiency in tomato paste, rice and wheat production in 2017, 2018 and 2020 respectively. The Buhari Government has been big on Agriculture since it came to power in 2015. With billions in incentives and concessionary loans injected into the sector. Agriculture sector is still in a recession.
- Reduce unemployment from 13.9% as at Q3 2016 to 11.2% in 2020.
– Create an average of 3.2 million jobs yearly between 2017-2020. The government did not directly address the under-employment rate which stands at about 18%.
Nairametrics in October 2016 published an article calling for an economic plan for the country.