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Tag: MTEF

  • Foul call by Fowler?

    Just as well – the Federal Inland Revenue Service (FIRS) has denied that hiking value-added tax (VAT), by 35% to 50%, from its current five per cent, is imminent.  Given that the economy is just making it out of recession and the government is about implementing the new minimum wage, the move would have been counter-productive.

    Wahab Gbadamosi, FIRS head of communication and Servicom department, put the record straight on what Babatunde Fowler, FIRS executive chairman, told the Senate committee: “Though he indicated that there should be an increase in VAT rate by the end of the year, he never for once suggested a 50% hike or any percentage increase at all”

    Before that denial, Mr. Fowler was quoted to have told the Senate Committee on Finance, on the imperative to increase VAT to shore up the government’s revenue, as part of the Federal Government’s Medium Term Expenditure and Fiscal Strategy Framework (MTEF).  Jacking up VAT, he was reported to have insisted, was necessary to raise more cash, so the government could meet its obligation to citizens.

    “Nigerians should be ready for increase in VAT before the end of the year,” he reportedly declared. “VAT is higher in other countries, including Ghana and many others.  There should be increase in rate but not immediately.”

    To further underscore the imperative of making taxes – and less oil revenue – as primary basis of government spending, Mr. Fowler told the committee that the government’s tax revenue projection for 2019 was N8 trillion, out of which VAT was projected to rake in N3 trillion.  He also painted the progressive increase in tax receipts, in the last three years: 2016 (N3.31 trillion), 2017 (N4.03 trillion) and 2018 (N5.3 trillion), suggesting that for FIRS to gross the 2019 N8 trillion target, VAT should be pressed into service.

    “I can certainly see an increase in VAT of at least 35% to 50% this year, based on our enforcement activities.  There certainly will be an increase in company income tax (CIT) and also petroleum profit tax (PPT),” he said, adding that “A lot of Nigerians travel to Ghana and other West African countries and they can see that theirs is much higher.  They pay when they go for those trips.  We should be ready for an increase on VAT.”

    There is a lot to be said for making taxation the main driver of public spending; just as there is much to be decried in the present practice of oil money, driving public expenditure.  Taxation could be the single antidote to combat public sector corruption, since citizens are much likelier to exert control and demand accountability, if the cash, by tax, is hard earned money, coming from their pocket.

    Indeed, the present endemic corruption could well have emanated from the feeling that oil money is nature’s manna, and not anyone’s direct sweat.  So, tax as main engine of public spending, is near-unassailable. Since VAT is consumption tax, the points that push other taxes should, other things being equal, push the case of VAT.

    Still, the weakest argument is clearly the one that presupposes that since Ghana’s VAT is 10%, Nigeria’s should automatically be so.  That is soft and emotive; and commands little or no merit, beyond a mere wish.  First, it shuns the economy of scale VAT should enjoy, with Nigeria’s huge population.  Then, it underplays the lack of enforcement, that the FIRS boss himself admitted.  If these two factors are harnessed, VAT earnings should soar, other things being equal.  So, instead of making a lazy, surface-to-surface comparison with Ghana and other West African countries, FIRS should first revamp its enforcement machine.  But there is also talk of some West African ECOWAS tax protocol, to which Nigeria is bound.  That is true.  But even regional protocols should not be at the expense of locals’ economic benefits.

    The argument is, therefore, not ever to increase VAT.  That would come when the economic indices allow it.  Right now, however, it is bad timing: with Nigeria’s economy slowly coming out of recession and the new minimum wage regime about to take off.

    You don’t increase minimum wage with the left hand only to take it back, from the poor and most vulnerable, with the right, through VAT.  That is why any call for VAT increase right now is nothing but a foul call.

  • Senate postpones debate on MTEF

    Senate postpones debate on MTEF

    The Senate on Thursday postponed till December 5, debate on the 2018-2020 Medium Term Expenditure Framework (MTEF)

    The postponement followed a motion by the Senate Leader, Ahmed Lawan, on the floor of the Senate on Thursday.

    The upper house agreed to step down the MTEF document until Tuesday when it would have known the Organisation of Petroleum Exporting Countries (OPEC) benchmark.

    The Deputy President of the Senate, Ike Ekweremadu, who presided over plenary, urged lawmakers to support the motion to enable the upper chamber take informed decisions on the matter.

    He said: “We would wait and see the outcome of the OPEC meeting regarding production quota.

    “That will determine what would be the ultimate benchmark.

    “I, therefore, appeal that we support the prayer and step down the consideration of the report of the committee on MTEF.

    “This is to ensure that by the time we come back next Tuesday, we will be able to have the necessary information that will enable us to take decision on the matter.”

    NAN

     

  • Senator seeks review of revenue projections in budget

    Senator seeks review of revenue projections in budget

    A member of the Senate Committee on Appropriation, Sen. Ibrahim Danbaba, on Thursday in Abuja advocated the review of revenue projections in the country’s annual budget.

    He told the News Agency of Nigeria (NAN) that the review was necessary in view of issues that emanated from stakeholders’ meeting on the Medium Term Expenditure Framework (MTEF) and Fiscal Strategic Paper (FSP) 2018-2020.

    Danbaba, who represents Sokoto South Senatorial District is worried that the capital aspect of the national budget was usually not implemented above 50 per cent.

    He also expressed concerned on why the situation should remain the same in spite of the fact that the projections were made by the managers of the economy.

    “Ministries, Departments and Agencies (MDAs) are struggling to survive because of lack of funds.

    “We cannot implement capital projects, and every year they talk of 50 per cent. Why should we be operating this budget at less than 80 per cent?” he said.
    “The loan stuff, we have raised about N1.4 trillion but only N450 billion of that amount was used to implement capital projects. That should not be the case,” Danbaba said.

    According to him, if there are problems with the projections, then they should be reviewed.

    “There are about two institutions that contribute to the failure of the Federal Government’’ budget – Nigerian National Petroleum Corporation (NNPC) and Central Bank of Nigeria (CBN).

    “If we can sort out the problem of NNPC it will be good, because it has about 27 agencies that are supposed to contribute money to the internally generated component of the budget.

    “In fact, they are supposed to contribute not less than 30 per cent of the projected internal revenue segment of the budget, but not even a naira was paid into the revenue account of the federation by the corporation.

    “It was not that this money was not raised, it was raised.

    “We should privatise NNPC. Once we do that, we will eliminate all sharp practices,” the lawmaker said.

    Read Also: Senate accuses CBN, NNPC, others of frustrating passage of 2018 budget

  • Fed Govt submits revised MTEF to Senate

    Fed Govt submits revised MTEF to Senate

    The Federal Government yesterday submitted a revised version of the 2018 to 2020 Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) to the Senate for consideration and approval.

    One of the major revisions was the adjustment of the Gross Domestic Product (GDP) growth rate from 4.5per cent to 3.5per cent.

    Minister of State for Budget and National Planning, Zainab Ahmed at an interactive session with the Senate Joint Committee on Finance, Appropriations and National Planning explained that other key parameters and assumptions like oil benchmark, daily oil production estimates and exchange rate were retained in the revised version.

    Ahmed allayed the fears that the adjustments would affect the N8.612 trillion 2018 budget proposal.

    She noted that the adjustments had already been reflected in the 2018 budget estimates submitted by President Muhammadu Buhari to a joint session of the National Assembly on November 7, 2017

    The minister listed some of the adjustments made to the 2018 to 2020 MTEF submitted by the Executive to the National Assembly in October to include: N710 billion to be generated from the restructuring of government’s equity in all the Joint Venture oil assets; N320 billion additional revenues from revision of terms to improve government take in the Production Sharing Contracts; additional N60 billion from Excise Duties on cigarettes and alcohol; N305 billion additional Company Income Taxes from the Voluntary Assets and Income Declaration Scheme (VAlDS); N100 billion from improvements by Federal Inland Revenue Service (FIRS) in the collection of Value Added Tax (VAT); N2.5 billion from special taxes on insurance of luxury cars, as well as surcharge on luxury goods and N250 billion provision as unspent balance carried forward from 2017.

    Ahmed said: “The key assumptions on the macro framework as defined in our MTEF and the only difference in the key assumptions is that we have adjusted the GDP growth from 4.5 per cent. And this is as a result of a meeting we had with you while discussing the last MTEF down to 3.5 per cent. But all the other assumptions at 2.3million barrels per day, oil price of $45 per barrel, exchange rate of N305/$1 are the same.

    “The fiscal deficit is now N2.05 trillion, down by over N940billion, also pushing the debt/GDP ratio downwards from 2.61 per cent to 1.77 per cent.”

    According to Ahmed, the adjustments were the fallout of the recommendations of a committee chaired by Finance Minister Kemi Adeosun, which identified additional revenue sources of about N1trillion to cut the 2018 budget deficit.

    She said: “When the FEC approved the MTEF/FSP, it constituted a Committee, chaired by the Minister of Finance, which was tasked with identifying additional sources of about N1 trillion revenues to cut the 2018 budget deficit and new borrowings. The outcome of the work of the Committee necessitated a revision of the MTFF, which also formed the basis of the 2018 budget proposal.

    “This briefing note and accompanying submissions relate to the revised MTEF/FSP and MTFF which are in alignment with the 2018 Executive Budget proposal, and were part of the documents that accompanied the 2018 Budget laid before NASS.”

    Some lawmakers who spoke at the session, insisted that the non-oil revenue were unrealistic.

    Specifically, they cited the Federal Government Independent Revenue projection of N807billion for 2017, where only N155.14billion (representing 74 per cent failure) was achieved as of September this year.

    Chairman, Senate Committee on Finance, John Enoh and a member of the joint committee, Abdullahi Danbaba Ibrahim wondered why the same projection was used in 2018.

    Enoh said: “Why don’t we have anything on interest rate as part of the MTEF document? That will be the best way to talk about aligning the monetary and the fiscal. Why are we putting more than N800 billion as independent revenue when the president admitted in his address to the National Assembly that it had suffered about 74 per cent variance. And yet in 2018, we are still putting more than N800 billion for independent revenue. Are we just balancing the figures? How do you expect to get the revenue if from the beginning even what you are projecting you know that you can’t make it?”

    A member of the committee, Adamu Aliero ( Kebbi central ) said: “I find it difficult to understand why the budget for 2017 should be truncated by 31st December when less than 20 per cent of the capital budget has been released. By withholding capital releases, you are more or less contracting the economy.”

    Senate President, Abubakar Bukola Saraki said the 2018 to 2020 MTEF and Fiscal Strategy Paper (FSP) will be approved this week.

    The debate on general principles of the N8.612 trillion 2018 Appropriation Bill, scheduled for today and Thursday this week, was shifted to Tuesday and Wednesday next week.

    MTEF/FSP provides the parameters upon which the budget is prepared.

    The Fiscal Responsibility Act, stated that the MTEF and FSP must be approved before the budget is considered.

    Saraki explained that the postponement of the budget debate is to enable the Senate to approve the MTEF/FSP before commencement of debate on the 2018 budget estimates.

  • FEC okays 2018 – 2020 MTEF

    FEC okays 2018 – 2020 MTEF

    The Federal Executive Council (FEC) meeting on Wednesday approved the 2018 to 2020 Medium Term Expenditure Framework (MTEF).

    The Minister of Budget and National Planning, Udoma Udo Udoma, disclosed this to State House correspondents at the end of the FEC meeting chaired by Acting President Yemi Osinbajo at the Presidential Villa, Abuja.

    He was with three other ministers – Lai Mohammed (Information), Kemi Adeosun (Finance) and Adebayo Shittu (Communication) – at the briefing.

    Udoma said the Federal Government aims to grow the economy by 7 per cent by 2020.

    He said the government targets to grow the economy by 3.5 per cent by 2018 and 4.5 per cent by 2019.

    According to him, the federal government has been consulting with state governors and other stakeholders over the MTEF.

    He said: “Council today approved a memorandum that was submitted by my ministry and approved the 2018-2020 MTEF, as we know we have been having extensive consultation in the last few weeks with the governors, members of the public and the leadership of the National Assembly about the MTEF.

    “So we submitted it and was approved by council. The highlight of it is that we are committed to achieving a 7 per cent growth rate by 2020 at the end of the three year plan in accordance with the economic recovery and growth plan.

    “MTEF is based on the economic recovery and growth plan and in terms of the trajectory of getting the 7 per cent, we have approved a slightly different trajectory in the sense that by next year we target 3.5 per cent in 2018, in 2019 it will be 4.5 per cent growth rate and of course in 2020 it will be 7 per cent growth rate.

    “In terms of crude oil production, our estimate projection for next year is 2.3 million barrels per day. We expect it to be broken down to 1.8 million barrels per day for regular crude and 500 thousand barrels per day in terms of condensate.”

  • Senate to pass MTEF this week

    Senate to pass MTEF this week

    The Senate yesterday said it would pass the controversial Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) this week.
    It said passage of the MTEF and FSP will enable it to commence consideration and passage of the 2017 budget.
    It said the consideration of the report of the Committee on Finance on the 2017 to 2019 MTEF and FSP, in accordance with the Fiscal Responsibility Act of 2007 will be top priority.
    The passage of the MTEF has held up commencement of work on the 2017 budget proposals which had earlier been slated for last week.
    The upper chamber also said that it would occupy itself with the amendment of the Company and Allied Matters Act (CAMA) and the Universal Basic Education Act.
    The ministerial briefing on the proposed closure of the Nnamdi Azikiwe Airport, Abuja, will dominate discussion at its three day plenary sittings, the Senate said.
    This is contained in the notice paper released by the office of the chairman, Senate Committee on Rules and Business, Senator Baba Kaka Garbai.
    It said following the decision to invite the Minister of Power Works and Housing, Mr. Babatunde Fashola (SAN), representatives of the company billed to handle the repair of the runway of the airport, Julius Berger, Minister of State for Aviation, Hadi Sirika as well as heads of the security agencies, discussions on the proposed closure will continue today.

  • FEC okays 2017-2019 MTEF

    FEC okays 2017-2019 MTEF

    • Govt projects $42.5 oil price for 2017 budget

    • N400b released from 2016 budget

    The Federal Executive Council (FEC) yesterday approved the Medium Term Expenditure Framework (MTEF) and Fiscal Strategy Paper (FSP) for 2017 to 2019.

    Minister of Budget and National Planning Udoma Udo Udoma broke the news to State House correspondents at the end of the meeting presided over by President Muhammadu Buhari.

    He was accompanied by the Minister of Trade and Investment, Okechukwu Enelamah.

    According to Udoma, the 2017 budget and the following two years’ budgets will be based on the framework.

    He said the implementation of this year’s budget is going smoothly, adding that N400billion has so far been injected into the economy.

    Udoma said: “In terms of the performance of the current budget, in terms of the capital budget, we have released over N400 billion and we are up to date in terms of the recurrent, all salaries have been paid, overheads are released, statutory transfers are made.”

    He said the oil price benchmark for the period included $42.5 per barrel for 2017, $45 per barrel for 2018 and $50 per barrel for 2019.

    Oil production in the framework, he said, has been pegged at 2.2 million barrels per day (bpd) for 2017, 2.3 million bpd for 2018 and 2.4 million bpd for 2019.

    The framework, he said, fixed growth rate at three per cent for 2017, 4.26per cent for 2018 and 4.04 per cent for 2019.

    According to him, exchange rate of N290 to $1 has also been projected.

    He said the framework will be forwarded to the National Assembly for approval.

    He said: “The Federal Executive Council meeting approved the Medium Term Expenditure Framework (MTEF) and the Fiscal Strategy Paper (FSP) for 2017 to 2019.

    “As you know, the Fiscal Responsibility Act requires the executive to prepare the MTEF and send it to the National Assembly for their consideration.  And it is on the basis of the MTEF that the next budget will be fashioned; so in short, we have started the process of preparing the 2017 budget.”

    He explained that there were extensive consultations with the private sector, governors, non governmental organisations (NGOs) and other stakeholders before the MTEF was presented to FEC for approval.

    He said: “In the 2017 to 2019 MTEF, the government intends to intensify efforts in pursuing manpower driven economy. So we intend to intensify effort to diversify the economy; we intend to go on with the implementation of ongoing reforms in public finance; we intend to enhance the environment for ease of doing business so as to generate private sector and private investment.

    “We intend to continue to pursue gender sensitive, pro-poor and inclusive social intervention schemes similar to what we did in 2016. Our social intervention programmes are going to be sustained.

    “We intend to devout even more resources to critical infrastructure projects just as we did this year. So we will continue to spend more on roads, rails, transport infrastructure, ports and so on.

    “We intend to focus on plane governance and security and we intend to maintain the zero-based budgetary approach.”

  • FEC approves two- year MTEF

    FEC approves two- year MTEF

    The Federal Executive Council (FEC) on Wednesday approved the Medium Term Expenditure Framework (MTEF) for 2017 to 2019.

    The Minister of Budget and National Planning, Udoma Udo Udoma, disclosed this to State House correspondents at the end of the meeting presided over by President Muhammadu Buhari.

    According to him, the 2017 Budget and others will be based on the framework.

    He said the oil price benchmark for the period includes $42.5 per barrel for 2017, $45 per barrel for 2018 and $50 per barrel for 2019.

    Oil production in the framework, he said, has been pegged for 2.2 million barrels per day for 2017, 2.3 million barrels per day for 2018 and 2.4 million barrels per day for 2019.

    According to the minister, the framework fixed growth rate at 3 per cent for 2017, 4.26 per cent for 2018 and 4.04 per cent for 2019.

    Udoma said the exchange rate of N290 to $1 has been projected.

    He said the framework will be forwarded to the National Assembly for approval.

  • MTEF: FEC approves N6tr expenditure for 2016

    MTEF: FEC approves N6tr expenditure for 2016

    The Federal Executive Council (FEC) presided by President Muhammadu Buhari on Monday approved N6 trillion expenditure for 2016 Budget under the Medium Term Expenditure Framework (MTEF).

    The FEC after three hours meeting approved the three-year MTEF.

    The Minister of Budget and National Planning, Senator  Udoma Udo Udoma, spoke with State House correspondents at the end of the meeting.

    He was accompanied by the Minister of Information, Lai Mohammed and Minister of State for Budget and National Planning, Zainab Ahmed.

    According to him, an oil price of $38 per barrel of crude oil and 2.2 million production barrels per day were projected in the framework.

    The approved MTEF, the minister said, will be forwarded to the National Assembly.

  • FEC may approve MTEF Monday

    FEC may approve MTEF Monday

    • No going back on zero budgeting, says minister

    Barring any last minute change of plan, the Federal Executive Council (FEC) would on Monday, approve the Medium Term Expenditure Framework (MTEF).

    The zero budgeting policy of the government, according to the federal government, would also be strictly enforced.

    Minister of Budget and National Planning, Senator Udo Udoma, made this known to State House correspondents after the Vice President, Prof Yemi Osinbajo (SAN), visited the officials currently fine-tuning the 2016 budget.

    He said: “This administration is introducing zero-based budgeting which means that every activity must be justified in accordance with the principle of this administration.

    The minister said: “We have camped people here to do data clean-up and integrity checking in preparation for the budget. We invited the Vice President to come and see what we are doing. When we finish this process, we will then start the bilaterals: discussing with the various MDAs.

    “Next week, we will get approval from Council for the MTEF. After that, we will have numbers to give them. So we are working very hard to ensure that the budget is out before the end of the year.”