The Revenue Mobilisation Allocation And Fiscal Commission (RMAFC) has reported an accrual of over N5.24 trn in the Federation Account between January to June this year.
This is coming barely 72 hours after the outgoing Chairman of the Federal Inland Revenue Service (FIRS), Muhammed Nami, said on Monday the Service has so far collected over N8trn in first eight months ahead of its target of N13 trn. for this year.
Also, on Tuesday the Finance Ministry disclosed that its Project Lighthouse Programme, which deploys technology to recover debts successfully recovered about N57bn out of a total debt portfolio of N5.2trn in 10 Ministries, Departments and Agencies (MDAs).
Suddenly, it appears the government and its agencies have realised the essence of their roles and responsibilities in terms of accountability on revenue mobilisation.
The RMAFC Chairman, Mohammed Bello Shehu, said the report on the accrual was captured in the monthly report to the Federation Account Allocation Committee (FAAC) by the Central Bank of Nigeria (CBN) titled: “CBN Federation Account Component Statement”.
The Chairman said out of the gross revenue inflows into the Federation Account between January and June, 2023, about N627.302bn was for the Nigerian National Petroleum Company (NNPC) Limited Joint Venture Petroleum Profit Tax (PPT) due, captured and recorded by the FIRS, but utilized by the NNPCL for other FGN obligations.
Also, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) remitted N823.512bn to the government coffers, while the FIRS recorded a gross collection of N3.66trn. out of which only N3.02trn. was remitted, retaining over N64bn as cost of collection.
Similarly, the Nigeria Customs Service (NCS) remitted about N764.63bn, while the NNPCL withheld all its earnings during the period either as profit revenue or other revenues as contained in the Petroleum Industry Act (PIA), 2021.
The RMAFC said the NNPCL revenue performance could not be assessed, since there was no disclosures on either its revenue target or remittances to the Federation Account.
Besides, about N1.491trn. was realized as Value Added Tax (VAT) during the period, while about N83.024bn. was realized from the Electronic Money Transfer Levy (EMTL), from which about N3.321bn. was paid to FIRS as cost of collection.
In addition, the RMAFC Chairman said the FIRS also received about N82.032bn. and N3.321bn. as cost of collection on Petroleum Profit Tax (PPT) and Company Income Tax (CIT) and EMTL collections respectively in the period.
Shehu said the report also revealed that the FIRS and NCS received about N59.59bn. as cost of collection of VAT within the period under review.
Another N16.681bn., the report said, was realized from the solid minerals sector, while total collections from VAT was about N1.387trn. was shared to the three-tiers of government in accordance with the approved VAT sharing formula. About N1.117trn. was paid in the month of March, 2023 as Consultancy Fee on VAT.
On the statutory allocations to the three tiers of government, Shehu said about N3.069trn. was shared to the three-tiers of government for the period.
On cost of collection to Revenue Generating Agencies (RGAs) from the Federation Account, the report showed that the NCS received about N53.52bn. against N33.96bn received by the NUPRC.
About N48.11bn. was paid to the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA). “This money was collected by NUPRC as penalty on gas flared. Revenues on gas flared penalty used to be Federation Account revenues before the PIA, 2021 which provided that such revenues should be paid 100% to the NMDPRA,” the report said.
The RMAFC Chair described the statutory deductions, which constituted 32.27 percent of the total inflow into the Federation Account in the six month period as superfluous and a drain on the Federation Account.
Shehu also disclosed that about N1.69trn. was deducted at source by the Office of the Accountant General of the Federation (OAGF) as approved statutory deductions, with a further deduction of about N70bn. by the FIRS under the FIRS Priority Projects in the second quarter.
The Chairman observed that the Nigerian economy at the moment required some pragmatic measures to enhance distributable revenues for the three tiers of government for the overall development and growth of the country.
Recommendations in the report on the operations and management of the Federation Account made reference to: Payment of cost of collection to RGAs which should be tied to revenue performance where each RGA should receive as cost of collection commensurate to the revenue generated against its revenue target in the Appropriation Act; the need for the government to review the payment of 100% (less cost of collection) revenue realized from gas flared penalty to the NMDPRA as Gas flared penalty was hitherto a Federation Account revenue component taken over by the PIA, 2021.
Other recommendations included the need to review, holistically, all legislations with respect to statutory deductions to allow for increase in the amount to be shared among the three-tiers of government; greater emphasis on the Solid Minerals sector to improve revenue generation therefrom and further achieve economic diversification; no further deduction should be made by FIRS in the name of ‘priority projects’ to avoid a repeat of the situation under NNPC where large chunk of funds were deducted as first line charge for ‘NNPC priority projects’; and all accruals due on 13% Derivation should be deducted as at when due to avoid refunds in future.
“This is to guarantee accountability, probity and transparency in the management of the Federation Accounts and disbursements to the three-tiers of government”.
The Commission also recommended that all NNPCL JV PPT should be paid to the Federation Account through FIRS, i.e. such taxes should not be retained by the company in the name of financing FGN priority projects, and NNPCL should be made to remit promptly all revenues due to the Federation Account as at when due in compliance with the provisions of the PIA, 2021.
The Chairman reiterated the commitment of the Commission in ensuring the elimination of opacity in the management of the country’s Commonwealth and promoting prudence, transparency and accountability.
