Connect with us
Switch
Advertisement
Polaris bank
Advertisement
Esetech
Advertisement
Payfarmer
Advertisement
Patricia
Advertisement
IZIKJON
Advertisement
Fidelity ads
Advertisement
Stallion ads
Advertisement
app

Macro-Economic News

Nigeria’s records 6.1 percent tax to GDP as tax base for VAT rise to N23.7 trillion

Nigeria’s tax to GDP landed at a paltry 6.1% of GDP for 2019.

Published

on

Nigeria recorded a total tax collection of about N8.8 trillion in 2020 translating to a tax to GDP ratio of 6.1%. Total taxes collected include oil and non-oil tax plus taxes collected by states.  Nigeria has a nominal GDP of N145.6 trillion as at December 2019. This is according to data collated from the FG and States taxes for 2019.

Data was sourced from the 2019 Budget Implementation report and the 2019 IGR report published by the National Bureau of Statistics (NBS). Nairametrics Research keeps a database of government data.

The Numbers

VAT – In the 2019 budget, Nigeria projected a total VAT revenue of N1.7 trillion as it anticipated higher tax revenues from vatable goods and services. VAT is collected by the Federal Inland Revenue Service and by law businesses who charge Vat are expected to remit same to the government after netting off the vat they paid on supplies (otherwise called input vat) from their sales proceed (output VAT).

  • According to the data, actual VAT collected during the year was N1, 188.85 (millions) compared to a budget of N1,703.89 billion representing a negative variance of N515 billion or 30%.
  • Since 5% was charged on invoices as at 2019, the amount upon which VAT was charged and remitted was N23.77 trillion only.
  • This suggest the total transaction base for VAT in the country in 2019 was N23.77 trillion or 16.2% of GDP. Nigeria’s total nominal GDP N145.6 trillion.
  • In 2018, the government earned a total VAT revenue N1,090 billion which also translates to a transaction base of N21.8 trillion. Between 2018 and 2019, Nigeria’s VAT transaction base has risen by N1.98 trillion or 9% year on year.
  • Nigeria increased its VAT rate to 7.5% in 2020.

Corporate Tax – Nigeria also charges a corporate tax of 30% on chargeable profits (this represents income after deducting all allowable expenses). According to the budget implementation report a total of N1,517.51 billions was collected as corporate tax in 2019 compared to budget of N1,761.53 billion.

  • At 30% corporate tax rate, total tax base was N5,058 billion (N5 trillion) which is also the total profits upon which Nigerian companies paid tax on.
  • In 2018, the government collected N1,429.93 billion in corporate taxes which indicates the Federal Inland Revenue had a better year in 2018.

Total Taxes – Nigeria collected total non-oil taxes of N3,548.56 billion in 2019 which comprises of N1,517.51 billions (Corporate Taxes), N1,188.85 billions (Vat), N792 billion (Customs, import, fees and excise duties). Total oil taxes and royalties in 2019 was N4 trillion

Specta

According to data from the National Bureau of Statistics, state governments collected a total taxes of N1, 334 billion which includes PAYE (N809.23 billion), Direct Assessment (N47.6 billion), Road taxes (N30. 2billion), other taxes (N225.4 billion) and MDA revenues of N221.5 billion.

Based on the officially published tax figures for Nigeria (Federal and States) total taxes collected in 2020 is about N8, 883.5 billion. As a percentage of GDP, Nigeria taxes represents 6.1% one of the lowest in the world. According to data from the OECD (a group of some of the most developed countries in the world) indicates their average tax to GDP ratio is about 32.9% of GDP on average. France, one of the OECD countries has a tax to GDP ratio of over 46%.

Upshots

Nigeria seems set to rely heavily on taxes to fund its federal and stage government expenditure. To achieve its target it will have to broaden its tax base and hope that economic activities pick up to be able to meet projections. Nigeria’s very low tax to GDP ratio has often been blamed on low tax base as over 50% of the economy remains informal. In the recently approved 2020 revised budget, the FG is projecting total VAT and Corporate tax revenue of N2, 029.3 million and N1,694 trillion respectively.

Nairametrics Research team tracks, collates, maintains and manages a rich database of macro-economic and micro-economic data from Nigeria and Africa. Our analysts share some of the data collated on Nairametrics, using formats such as docs, tables and charts etc. The team also publishes research based analysis as articles on a regular basis.

Click to comment

Leave a Reply

Your email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Macro-Economic News

Price Watch: Nigerians paid less for Kerosene in December 2020

NBS Report shows that consumers paid less for Kerosene in December than they did in November 2020.

Published

on

Average prices of Kerosene, Diesel and Cooking Gas in Nigeria

The latest National Bureau for Statistics (NBS) Price Watch report for the month of December 2020 indicates that the average price per litre paid by consumers for National Household Kerosene reduced by 0.17% from N353.38 in November 2020 to N352.79 in December 2020.

Also according to the report, the average price per gallon paid by consumers for National Household Kerosene reduced by 3.52% from N1,218.50 in November 2020 to N1,175.59 in December 2020.

Price variations across states

  • In the month of December 2020, States with the highest average price per litre of kerosene include; Benue (N436.81), Ebonyi (N425.83) and Taraba (N423.33).
  • However, consumers in Bayelsa (N235.95), Rivers (N302.04) and Delta (N307.69) enjoyed the lowest average price per litre of kerosene.
  • Consumers in Kebbi (N1,534.21), Nasarawa (N1,488.00) and Benue (N1,450.00) paid the highest average price per gallon of kerosene.
  • While consumers in Sokoto (N733.33), Bayelsa (N773.75) and Adamawa (N822.00) on the other hand, paid the lowest average price per gallon of kerosene.

Prices across zones

  • Consumers in South-East zone paid the highest average price for a litre of Kerosene (N377.53), followed by North East (N370.13), North West (N354.66), North Central (N354.44) while consumers in South West(N337.57) and South South (N325.96) paid the lowest average price for a litre of Kerosene.
  • In respect of the average price paid for a gallon of Kerosene, consumers in North West zone paid the highest (N1,197.54), followed by North Central (N1,305.68), South East (N1,220.66), while consumers in South West (N1,161.00), North East (N1,113.25) and South-South(N1,037.60) paid the lowest average price of a gallon of kerosene.

Why this matters

Kerosene has remained an important source of energy for cooking for most families, both in the rural areas and cities. Kerosene is mostly used in rural areas as a source of lighting.

Considering that food and lighting are very essential to life, it is therefore important that the price paid for Kerosene is quite reasonable and as well as affordable for most Nigerians.

Specta
Continue Reading

Macro-Economic News

Nigeria’s inflation rate hits 15.75% in December 2020, highest in 3 years

This is 0.86% points higher than the rate of 14.89% recorded in November 2020.

Published

on

Despite billions on agriculture, food inflation up by 108% since 2015.

Nigeria’s inflation rate increased by 15.75% (year-on-year) in December 2020, the highest rate recorded in 3 years.

According to the latest Consumer Price Index report, released by the National Bureau of Statistics (NBS), the latest figure is 0.86% points higher than the rate of 14.89% recorded in November 2020.

On a month-on-month basis, the index increased by 1.61% in December 2020. This is 0.01% point higher than the rate recorded in November 2020 (1.60%).

READ: Inflation rate up 207% since 2009 as bad economic policies ravages naira.

Food inflation

Specta

The closely watched index rose sharply by 19.56% in December compared to 18.3% recorded in the previous month.

  • On a month-on-month basis, the food sub-index increased by 2.05% in December 2020, up by 0.01% point from 2.04% recorded in November 2020.
  • The rise in the food index was caused by increases recorded in prices of bread and cereals, potatoes, yam and other tubers, meat, fruits, vegetable, fish and oils and fats.

READ: Hope rises for employment in December 2020 and January 2021 – CBN survey Report 

Core inflation

The “All items less farm produce’‘ or Core inflation, which excludes the prices of volatile agricultural produce stood at 11.37% in December 2020, up by 0.32% when compared with 11.05% recorded in November 2020.

  • Also, on a month-on-month basis, the core sub-index increased by 1.10% in December 2020. This was up by 0.39% when compared with 0.71% recorded in November 2020.
  • The highest increases were recorded in prices of passenger transport by air, medical services, hospital services, shoes and other footwear, passenger transport by road, miscellaneous services relating to dwellings, hairdressing salons and personal grooming establishments, and repair of furniture.
  • Others include vehicle spare parts, pharmaceutical products, motor cars, maintenance and repair of personal transport equipment, paramedical services, motorcycle, dental services, and bicycles.

READ: Cost of data subscription reduces by over 50% in 2020

Worst hit states

  • In the month of December 2020, Bauchi State recorded the highest inflation rate at 19.85%, closely followed by Kogi State with an inflation rate of 18.4%
  • Others include Edo (18.1%), Zamfara (17.9%), and Sokoto (17.6%)
  • In terms of food inflation, Edo State also recorded the highest rise in inflation rate with 24.1%, followed by Kogi (23.16%), Sokoto (22.2%); while Kwara and Zamfara State recorded food inflation of 22.1% and 21.7% respectively.

READ: Nigeria’s inflation expected to maintain double digit in the next one year

Coronation ads

Meanwhile, the urban inflation rate increased by 16.33% (year-on-year) in December 2020 from 15.47% recorded in November 2020, while the rural inflation rate increased by 15.20% compared to 14.33% recorded in November 2020.

Polaris bank

What this means

The rise in the consumer price index indicates that consumers spent more in the month of December compared to the previous month.

Jaiz bank ads
  • This implies that the purchasing power of Nigerians is continually eroding.
  • Nigerians could be faced with new worries if the second wave of the covid-19 pandemic leads to a second round of lockdown in the country.
  • The significant increase could, however, be attributed to the Christmas and New year festivities in the month of December.

Continue Reading

Macro-Economic News

Nigeria’s total public debt rises to N32.2 trillion ($84.57 billion) as at September 2020.

The total public debt (External and Domestic) incurred by Nigeria stood at N32.22 trillion ($84.57 billion) as of September 2020.

Published

on

How to avoid debt despite economic challenges

Nigeria’s total public debt stock as of September 2020, increased by over N6 trillion in just one year. This is according to the Nigerian Domestic and Foreign Debt report, recently released by the National Bureau of Statistics (NBS).

The total public debt (External and Domestic) incurred by Nigeria stood at N32.22 trillion ($84.57 billion) as of September 2020, which represents an additional N6.01 trillion when compared to N26.21 trillion recorded as of the corresponding period of 2019.

READ: Nigeria total public debt hits N31 trillion as debt service gulp over N1.2 trillion in H1 2020 

The breakdown shows that external debts accounted for 37.82% (N12.19 trillion) of the total debt stock, while domestic debts at N20.04 trillion represented 62.18% of the total.

Breakdown

  • Further disaggregation of Nigeria’s foreign debt showed that $16.74bn of the debt was multilateral.
  • Also, $502.38m was bilateral (AFD) and another $3.26bn bilateral from the Exim Bank of China, JICA, India, and
    KFW while $11.17bn was commercial which are Eurobonds and Diaspora Bonds.
  • Total external debt grew by $5.04 billion (N3.9 trillion) within the period, indicating an increase of 18.72%.
  • Total domestic debt on the other hand declined by $5.86 billion. However, it represents an increase in Naira value of N2.09 trillion, largely due to multiple devaluations of the currency during the period.

READ: Growing concern for Nigeria’s ballooning debt profile

Specta

A cursory look at the breakdown of the domestic debts show that 73.53% (N11.65 trillion) were in form of Federal Government bonds, 17.17% (N2.72 trillion) in Treasury bills, followed by Promissory Notes accounting for 6.13% (N971.9 billion) of the total federal government domestic debts.

Others include; FGN Sukuk (N362.6 billion), Treasury Bonds (N100.9 billion), Green bond (N25.7 billion), and Savings bond (N12.6 billion).

READ: Debt burden of the least developed nations rises to $744 billion – World Bank

More loans to be expected

On the 31st of December 2020, President Buhari signed the 2021 appropriation bill of N13.59 trillion into law, which 25.7% higher than the revised 2020 budget of  N10.8 trillion. However, the budget comes with a deficit of N5.6 trillion, which is expected to be financed mainly through borrowings both externally and domestically.

READ: Global Economy to grow by 4% in 2021 – World Bank

According to the minister of Finance, Budget, and National Planning, Dr. Zainab Ahmed, in a budget presentation on Tuesday, N2.34 trillion will be sourced each from domestic and foreign sources respectively, N709.69 billion from Multilateral/bilateral loan drawdowns, and N205.15 billion from privatisation proceeds.

READ: Analysis: Nigeria needs an austerity diet

Coronation ads

Recall that Nairametrics reported in December that, the World Bank finally approved a $1.5 billion loan request made by Nigeria as budget support in order to cushion the impact of the covid-19 pandemic on the country’s revenue.

Polaris bank

It is also worth noting that the federal government will be tapping into funds in unclaimed funds and dormant accounts.

Jaiz bank ads
Continue Reading
Advertisement




Advertisement