New taxes, excise duties on the way to boost revenue

The Federal Government will soon introduce new taxes and excise duties to raise funds for the execution of projects. Minister of Finance Mrs Zainab Ahmed made this known yesterday at the budget breakdown in Abuja, reports Nduka Chiejina (Assistant Editor)

The Federal Government will soon come up with new revenue generating initiatives to shore up resources available for the execution of projects.

Under the  proposed regime, new taxes and excise duties will be imposed to mobilise domestic revenue for better budget funding.

Speaking at the 2019 budget breakdown in Abuja yesterday, Minister of Finance Mrs. Zainab Ahmed said her ministry’s focus now “is on revenue because we do have to mobilize more domestic revenue so that we can better fund our budget. You can see from the performance that there is gap between what is projected for in the budget and what is actually generated”.

As a result, Mrs. Ahmed disclosed that government “very soon will be generating new revenue initiatives which will include a new set of taxes and excise duties but also working with the Federal Inland Revenue Service (FIRS) and Customs for new and enhanced measures for enforcement and also for compliance. By doing what we are doing, we might have to go to National Assembly to amend some laws that we have identified that as some gaps, some loop holes. We are doing everything we can to make sure our budgets are better funded going forward and it will start from 2019.”

With regards to the performance of the 2018 budget, Mrs. Ahmed disclosed that N820 billion has been released to Ministries, Departments and Agencies (MDA) for capital expenditure. This represents 43 per cent of MDA capitals for the fiscal year. The government, she said, is working to push this to N1.1 trillion by the end of this month.

In respect of fuel subsidies, the finance minister revealed that the ministry “is currently in the process of issuing promissory note to fuel marketers and last week released the first batch of N177 billion to the fuel marketers and we are doing some reconciliation processes to release the second batch to the fuel marketers, perhaps before the year closes out or in any case as early as possible in the New Year”.

On excess crude account controversy, Mrs Ahmed said “the excess crude account was refunded yesterday we had sent another N50 billion savings into the excess crude account. If you recall that the NEC had authorized the use of $1 billion from the excess crude account for security, so the performance of that instruction is what has produced what we have in the Excess Crude Account. So it has been largely depleted but we are still saving to it and this is the third month that we have been saving consistently into the Excess Crude Account.”

On the status of stamp duty cash, FIRS Chairman Babatunde Fowler noted that “what has happened is that in our stamp duty act, there is no provision for electronic transfer, especially in the banking sector. So, there is discrepancy in terms of collection of stamp duties whether it is NIPOST or FIRS. So, until the law is amended and currently it is in the House, the money is being warehoused in the Central Bank of Nigeria (CBN). But in terms of the actual amount, the Central Bank of Nigeria has those figures.”

On MDAs owing taxes, Fowler said: “We still have a lot of MDAs that are owing taxes before 2015 and with the help of the Presidency and the Ministry of Finance, they have come forward with an instalmental payment plan. The question was asked why the money was deducted from the current budget allocations,  it is because they have to continue to run and perform their services and they are limited as to how much can be deducted at once and that being said, a number of them have requested to pay over 46 years.  That shows the revenue that was not remitted prior to 2015.”

The highlight of the budget breakdown was the presentation made by the Minister of Budget and National Planning Udoma Udo Udoma. The 2019 Budget proposal, he said, seeks to continue the reflationary and consolidation policies of the 2017 and 2018 Budgets, which helped put the economy back on the path of growth.

Allocations to Ministries, Departments and Agencies (MDAs) of Government, he said, were guided by restoring and sustaining growth; investing in our people and building a globally competitive economy.”

As with 2016, 2017 and 2018 Budgets, the 2019 Budget, he pointed out, “has been prepared on the Zero Based Budget (ZBB) Principles. The 2019-2021 Medium Term Fiscal Framework (MTFF), Medium Term Sector Strategies and proposed 2019 Budget reflect many of the reforms and initiatives in the ERGP, which is our roadmap to economic recovery and a more sustainable growth. Projects are linked to government policies and overarching strategic priorities.”

As part of government’s revenue making plans for 2019, Udoma disclosed that “the Federal Government has sustained its efforts to improve public financial management through the comprehensive implementation of the: Treasury Single Account (TSA), the Government Integrated Financial Management Information System (GIFMIS) and the Integrated Payroll and Personnel Information System (IPPIS).”

He also reiterated that President Muhammadu Buhari “has directed that immediate action be commenced to restructure the Joint Venture Oil Assets so as to reduce government shareholding to 40 percent and that this exercise must be completed within the 2019 fiscal year and that the Department of Petroleum Resource (DPR) shall, within three months, complete the collection of past-due oil licence and royalty charges.”

Following President Buhari’s directive, the Ministry of Finance, working with all the relevant authorities, he said, has been authorised to take action to liquidate all recovered and unencumbered assets within six months.

Given the improved oil prices and production levels, Nigerian National Petroleum Corporation (NNPC), he added, has been ordered “to immediately commence the recovery of all outstanding obligations, including those due from Nigerian Petroleum Development Company (NPDC) (a subsidiary of NNPC), which it had agreed to pay since 2017.”

Among other revenue generating initiatives, President Buhari, the minister revealed, has directed that work should be immediately concluded on the deployment of the National Trade Window and other technologies to enhance Customs collections efficiency from the current 64 percent to up to 90 percent over the next few years.

Expenditure framework

• 2019 Federal Government spending (exclusive of GOEs/BT Loans) is projected to be N8.83 trillion, less than FY2018 approved budget by 3.22%. Recurrent (non-debt) spending expected to rise by 34.17%, from N3.52 trillion in FY2018 to N4.72 trillion (reflecting increases in salaries & pensions including provisions for implementation of a new minimum wage)
• Capital Expenditure (Inclusive of Transfers, GOEs Capital & Project-tied loans) as % of FGN Expenditure is 30% At N2.14 trillion, debt service is 24.24% of planned spending; Provision to retire maturing bond to local contractors decreased by 36.84% from N190 billion in FY2018 to N120 billion
• Personnel costs (MDAs & GOEs) accounts for 52% of non-debt recurrent planned spending: 11% for Pensions (SWV & CRF), 9% for Overheads (MDAs & GOEs), 7% allocated to Social Investment Programme, 1% to Basic Health Care Provision Fund, 9% to other service wide votes (including GAVI/Immunisation), 3% as SWV provisions for the Power Sector Recovery Programme and 8% Transfer of GOEs Operating Surplus.

Key Highlights of the

Expenditure Framework

• Some provision for possible minimum wage increase
• Government is set to redress years of underfunding of pensions and gratuities

Significant provision for National Health

• 1% of CRF goes to the Basic Health Care Fund
• Provision for counterpart funding for immunisation (GAVI)
• Overall, there is significant provision for investment in Human Capital over the medium term

Financing Budget Deficit – Highlights

• Overall budget deficit of N1.859 trillion in 2019 represents 1.33% of GDP.
• Projected deficit within threshold stipulated in the Fiscal Responsibility Act (FRA) 2007.
• Budget deficit is to be financed mainly by borrowing N1.649 trillion.
• Domestic sources N824.82 billion
• Foreign sources N824.82 billion
• Government committed to an increase in the Minimum Wage
• Provision has been made for this in the 2019 Budget

MDA capital Expenditure

Allocations in the 2019 Budget

• Government has allocated N2.28 trillion for capital spending, inclusive of capital in statutory transfers.
• For comprehensiveness and transparency, the expenditure plans of the top 9 GOEs, as well as Multi-lateral and Bi-lateral project-tied loans have been integrated into the 2019 – 2021 Medium Term Fiscal Framework.
• With the inclusion of N275.88 billion representing capital for the top-nine GOEs and N556.02 billion for Multi-lateral/Bi-lateral project-tied loans, the aggregate capital budget is N3.12 trillion. This represents 30 percent of the total FGN proposed expenditure for 2019.
• In order to get full value for monies expended by the Government over time and to avoid duplication and waste, our emphasis will continue to be on completion of existing projects. Accordingly, provisions have been made to carry over projects that are not likely to be fully funded under the 2018 budget to the 2019 capital budget.

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Some Projects in the

2019 Budget

Transport

• N80.22 billion Counterpart funding for Railway projects including:
• Lagos-Kano (Ongoing)
• Calabar-Lagos (Ongoing)
• Ajaokuta-Itakpe-Aladja (Warri) (Ongoing)
• Port Harcourt- Maiduguri (New)
• Kano-Katsina-Jibiya-Maradi in Niger Republic (New)
• Abuja-Itakpe and Aladja (Warri)-Warri Port and Refinery including Warri New Harbour (New)
• Bonny Deep Sea Port & Port Harcourt and other Rail Projects
• N1.008 billion for construction of Terminal Building at Enugu Airport
• N13 billion for construction of Second Run-Way at NnamdiAzikiwe International Airport Abuja
• N27.12 billion for various rehabilitation of railway tracks including
• Rehabilitation of track from Port-Harcourt to Makurdi
• Maintenance of track (including emergency recovery, bridge and culverts repair)
• Procurement of spare parts (including lubricants) for the locomotives, coaches and wagons.
• Kuru to Maiduguri narrow gauge track rehabilitation project
• Track rehabilitation from Makurdi to Jos to Kafanchan to Kaduna junction
• Procurement and rehabilitation of locomotives and rolling stock
• Procurement of workshop equipment and rolling stocks
• Design, manufacture, supply, installation, testing and commissioning of electric overhead travelling cranes for carriage and wagons workshop
• Upgrading of signaling & telecom system on Eastern Line (Port Harcourt, Maiduguri, etc) including revised estimated total cost for extension to Western Line

Power

• N1.02 billion set aside as fund for the Mambilla Hydro Power project
• N400 million for construction of 215MW LPFO/ Gas Power station Kaduna
• N388.5 million for Kashimbilla transmission
• N398 million for Fast Power Programme Accelerated Gas and Solar Power Generation

Housing and works

• N30.04 billion for Federal Government National Housing Programme
• About N280.44 billion for the construction and rehabilitation of roads in every geo-political zone of the country, such as:
• Counterpart Funding for the Dualisationof Makurdi – Enugu Road
• Counterpart Funding for the Dualisation of Akwanga – Jos – Bauchi – Gombe Road
• Reconstruction of the Outstanding Sections of Benin – Ofosu – Ore – Ajebandele – Shagamu Expressway

Construction of Bodo – Bonny Road

• Pavement Strengthening and Asphalt Overlay of Ajebandele – Ijebu Ode – Shagamu Road
• Construction of Oju/Loko – Oweto Bridge to link Loko and Oweto
• Dualisation of Ilorin – Jebba – Mokwa/Bokani Junction Road

Kano – Maiduguri Road (Various Sections)

• Abuja – Lokoja Road (Various Sections)
• Dualisation of Obajana Junction to Benin (Various Sections)

Lagos – Shagamu – Ibadan Dual Carriageway

Early Works for the Construction of 2nd Niger Bridge in Anambra/Delta States

• Construction of Kaduna Eastern By-pass
• Abuja – Kano Dual Carriageway

Dualisation of Odukpani – Itu – IkotEkpene Road

• Construction of Kano Western Bye Pass
• Abuja – Abaji
• Suleja – Minna Road
• Rehabilitation & Expansion of Lagos – Badagry Expressway
• Rehabilitation of Vandeikya – Obudu – Obudu Cattle Ranch Road
• Rehabilitation of Ilorin – Kabba – Obajana Road In Kwara/Kogi
• Reconstruction of Nasarawa – Loko Road
• Dualisation of Sapele – Ewu Road (various sections)
• Reconstruction of Bida – Lambata Road in Niger State
• Rehabilitation of Ikorodu – Shagamu Road
• Rehabilitation of 9th Mile – Orokam Road In Enugu State
• Re-construction of Sokoto – Tambuwal – Jega – Kontagora – Makera
• Design and Construction of Bridge Across the Cross River at Uwana (Ebony State) to Nkomoro (Cross River State)
• Construction of Road Falali, Birni, Bako to Furoja Town (Ningilga), Bauchi State

Health

• N51.22 billion provisioned for the implementation of the National Health Act
• N21.25billion provided for GAVI/Immunisation
• N1.26 billion for the procurement Of Non Polio SIA Vaccine
• N1.12 Billion for the procurement Of Kits And Commodities For Community Health Influencers
• N780 million for the establishment Of Chemotherapy centres in UBTH, UITH, ABUTH, UMTH, OAUTH, UNTH, UPTH, FMC Owerri, FMC Abeokuta
• N7.63 billion for procurement of RI vaccines and devices
• N3.5 billion for counterpart funding including global fund/health

Water Resources

• N1.8 billion provisioned for the Zobe Water Supply Project – Phase I & II
• N1 billion for Partnership for Expanded Water, Sanitation and Hygiene (PEWASH)
• N1 billion for Special Intervention for Northeast and IDPs – Potable of portable water

Over N53 billion for water supply, rehabilitation of dams, and irrigation projects nationwide

Agriculture & Rural

Development

• N3.64 billion Support for Infrastructure, Projects and Coordination Services
• Over N15.66 billion for Promotion and Development of Value Chain across in more than 30 different commodities
• N5.46 billion for Veterinary and Pest Control Services
• N7.90 Billion for Rural Roads And Water Sanitation
• N3.27 billion for National Grazing Reserve Development
• N1.09billion for Mechanization
• N1.99 billion for Livelihood Improvement Family Enterprise (Life) Programme
• N2.52 billion for Food and Strategic Reserves
• N2.49 Billion for Agribusiness and Market Development
• N2.69 billionfor Extension Services
• N1.72 billion for Land and Climate Management
• N1.03 billion for GES – Delivery Platform, Roll-out and Management

Industry, Trade & Investment

 N42 billion for ongoing and planned Special Economic Zone Projects across the geopolitical zones to drive manufacturing/exports.

• Construction/Provision of Road for Ikpokri Energy City Project
• Completion of Lekki Model Textile and Garment Industrial Park
• Provision of Infrastructure at Brass Free Zone, Bayelsa State
• Construction of Textile & Garment Park, Lekki
• Construction of Special Economic Zone (SEZ) Sokoto
• Construction of Special Economic Zone (SEZ), Makurdi
• Completion of Consultancy Works On Ebonyi, Edo, Adamawa, Rivers, Bauchi, Enugu, Gombe, Nnewi, Abuja
• FGN investment in Enyimba Industrial Park, and Ibom Deep Sea Port and City
• N1 billion for Industrial Policy Reforms and Enabling Business Environment
• Export-Expansion Grant (EEG)
• N5.12 billion in the form of tax credit to support export via the Export Expansion Grant
• Recapitalisation of Bank of Industry (BOI) and Bank of Agriculture (BoA)

N15 billion provisioned to support these development finance institutions to support Micro, Small and Medium Scale Enterprises (MSMEs)

• N10 billion provided as a grant to BOI to subsidise interest rate charged on loans to SMEs. This is intended to make it possible for the Bank to give them single digit interest loans

Education and Niger Delta

 N3 billion Provision of Security Infrastructure in 104 Colleges

• N1.8 billion for payment of 5000 Federal Teachers Scheme Allowance
• N6.8 billion for various Scholarship allowances
• N1 billion for the construction and supervision of Gberegolor – Ogriagbene Road, Delta State
• N2 billion for the Construction of Agadagba – Akotogbo – Iyasan – Ovia River bridge Irele LGA,Ondo State
• N7.1 billion for various sections of the East-West Road
• N2 billionfor the construction of skills acquisition centres with resident supervision and furnishing/equipping in nine states of the Niger Delta Region

Regional Interventions

 N65 billion for reintegration of transformed ex-militants under the Presidential Amnesty Programme.

• N45 billion for Federal Initiative for North-East (Pilot Counterpart funding contribution)
• N10 billion as take-off grant for the North East Commission

SDGs

 N40 billion for SDGs Intervention Programmes/Conditional Grants

• N5.5 billion for other SDGs Projects

Special Intervention

Programme

 N500 billion for FGN Special Intervention Programme (including Social Housing, Home Grown School Feeding Programme, Government Economic Empowerment Programme, N-Power Job Creation Programme, Conditional Cash Transfers, etc)