Home Finance FG worries over declining investment in oil, gas, calls for increase effort in tax revenue

FG worries over declining investment in oil, gas, calls for increase effort in tax revenue

by Business News Report

Minister of State for Budget and National planning Prince Clem Ikanade Agba has expressed concern over the declining government revenue from oil stating that aggregate investment in oil and gas declined from $525bn in 2019 to $341bn in 2021 while investment in wind, solar and other renewable sources is soaring.  speaking at the Federal Inland Revenue annual retreat in Lagos the Minister said “As you may all be aware, the revenue profile of the government has been seriously challenged in the recent past due to multiple factors. Given that resources are relatively low compared to the huge responsibilities of the government, concerted efforts are required at this juncture to prioritise government expenditure as well as place emphasis on resource mobilisation.  In this context, the task of improving Nigeria’s tax revenue collection and funding position is urgent and it is a task that must be done without fail.  

“Recent happenings in the global economy is compelling nations to shift from dependence on resource wealth, particularly hydrocarbons to more innovative sources for revenue mobilisation. As the campaign for cleaner energy gains momentum and widespread support, it is resulting into lower new investments in exploration and production activities in the upstream petroleum industry.  For instance, On its part, the Federal Government has put in place the Strategic Revenue Growth Initiative (SRGI) and the annual Finance Act to mobilise domestic funds necessary for human capital and infrastructure development that are both drivers and enablers of sustainable economic growth and development. The SRGI is designed to improve government revenue and entrench fiscal prudence with emphasis on achieving value for money. In this regards, a total of 47 Strategic Revenue Growth Initiatives were identified across three Thematic areas to achieve sustainability in revenue generation, identify new revenue streams and enhance the enforcement of existing ones as well as achieve cohesion in the revenue ecosystem. 

“Within the SRGI initiative, FIRS was saddled with some deliverables which include (i) Improving Tax Collections, (ii) Closing Legal Loopholes, (iii) Broadening the Tax Base, (iv) Expanding and Improving VAT, (v) Improving Tax Compliance, (vi) Aligning Stakeholders on a Single Purpose, etc. These initiatives, we believe, have been largely achieved through the internal reforms you have introduced and the incremental changes to the tax laws via the annual Finance Act.  I encourage the Service to fully align its strategies, policies and practices to fully achieve its deliverables under the SRGI. Distinguished ladies and gentlemen, to grow the economy on an inclusive basis and achieve sustainable economic development, President Muhammadu Buhari GCFR launched the National Development Plan (NDP) 2021-2025 in December 2021.  It contains three volumes. The Volume I contains the policies with targets and the required investment; Volume II has the costed priority programmes and projects; while Volume III is the legal and legislatives imperatives, which includes the enabling laws that need to be passed or amended for effective implementation of the NDP, 2021-2025. 

“The Plan seeks to invest massively in infrastructure, ensure macroeconomic stability, enhance the investment environment and improve on social indicators and living conditions of the people. Specifically, the Plan aims to generate 21 million full-time jobs and lift 35 million people out of poverty by 2025 thus setting the stage for achieving the president’s commitment of lifting 100 million Nigerians out of poverty in 10 years.  The country can achieve these targets through an inclusive economic growth and development; leveraging its young workforce, enhancing implementation capacity at national and subnational levels and sustaining the growth of MSMEs. The Plan also focuses on identifying and removing binding constraints to growth as well as mobilizing resources for sustainable development of the country. With this Plan, the Federal Government intends to progressively continue to increase the capital component of its Budget and reduce spending on recurrent expenditure.  The financing of the NDP will rely heavily on domestic resource mobilization, especially from Non-Oil revenue sources. We all have critical roles to play in finding innovative ways to reform tax administration and raise public revenue to effectively finance the Plan. In addition, the Ministry, in line with its mandate and Presidential approval, has reached advanced stage in the development of Nigeria Agenda 2050 which is the country’s perspective development plan to replace the Nigeria Vision 20:2020. 

“We urge all critical stakeholders including the financial sector, our development partners and MDAs to continue to work closely with the Ministry to deliver on this onerous task.Distinguished ladies and gentlemen, in rounding off my address, I wish to commend the Board, Management and staff of the Service for supporting the economic growth initiative of the government.  Of particular note is the ability of the Service to bring innovations into tax administration which has boosted government revenues and enhanced ease of doing business in Nigeria. Let me take this opportunity to congratulate the Service for achieving the collection feat of 2021 with over 100% revenue target and crossing N6.405 trillion tax revenue threshold for the first time in the revenue history of our country.  The thrilling aspect of the achievement lies in the fact that almost 70% of the collection came from non-oil sources. The development of our country is a sacred and civic responsibility of every Nigerian and should involve everyone in this room.  

“Every aspect of our national development – security, infrastructure, social services, business-enabled environment, etc. depends on the national budget and the ability of the government to provide these itself depends on available revenue.  The onerous task of generating the required revenue rests squarely on the shoulders of the FIRS. Mr Chairman, distinguished ladies and gentlemen, “the reward for hard work is more work” and like Oliver Twist, Nigerians are asking that you do more, the government is asking that you do more, and I am asking that you do more.  I assure you of the government’s unflinching support as you make taxation the mainstay of government’s funding”.

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