James Emejo in Abuja
The federal government generated a total of N1.10 trillion as Value Added Tax (VAT) in 2018.
This represented a growth of 13.96 per cent (year-on-year), when compared to the N972.34 billion collected in 2017, the National Bureau of Statistics (NBS) stated yesterday.
However, a total sum of N298.01 billion was realised in the fourth quarter (Q4, 2018), representing an increase of 8.96 per cent when compared to the N273.50 billion collected in the preceding quarter.
The Sectoral Distribution of Value Added Tax (Q4 and Full Year 2018) released by the statistical agency, showed that other manufacturing companies generated the highest amount of VAT with N28.82 billion in Q4, closely followed by professional services and commercial and trading which both generated N24.12 billion and N16.02 billion respectively.
Mining activities generated the least VAT followed by pharmaceutical, soaps & toiletries and chemical, paints and allied industries with N35.75 million, N209.33 million and N258.39 million, respectively.
Of the total amounted generated in Q4, N138.42 billion was collected as non-import VAT locally while N47.89 billion was generated as non-import VAT for foreign.
The balance of N111.71 billion was generated as NCS-import VAT within the quarter in review.
However, in 2018, VAT receipts from agriculture totalled N2.46 billion, automobiles and assemblies N1.55 billion while banks and financial institutions generated N18.49 billion in the review year.
Also, breweries, bottling and beverages generated N35.92 billion, building and construction N10.00 billion as well as chemicals, paints and allied industries which raked in N1.38 billion
Other contributors to the 2018 VAT receipts include federal ministries and parastatals N19.44 billion, gas N5.74 billion, hotel and catering N6.28 billion and Local Government Councils N1.53 billion.
Other were offshore operations N2.56 billion, oil marketing N7.73 billion, oil producing N37.44 billion, other manufacturing N122.89 billion, professional services N86.28 billion and mining N182.54 million.
VAT from properties and investments totaled N4.15 billion, publishing, printing, paper packaging N1.63 billion as well as state ministries and parastatals N42.95 billion.
The Minister of Finance, Mrs. Zainab Ahmed, had recently pointed out that given the country’s low revenue generation level, the government was considering what it described as tough measures to achieve higher revenue.
In order to achieve this, Proshare, an online financial information service hub, in its latest economic report, had advised that if the country was to reduce unemployment and stimulate economic growth, it should increase VAT.
While the report stressed that in times of slow growth, economists would typically not prescribe raising taxes, it stated that since Nigeria currently has the lowest VAT in West Africa at five per cent, the government could be bold to increase the tax by at least 200 basis points, pushing the rate up by two per cent.
It noted that if this is implemented, the government should therefore concentrate the additional revenue in infrastructural developments that helps to drop the cost of doing business and citizen transactions to create headroom for consumption which would spur business growth.
This, over a period of 36 months, it stated, could reduce the cost of distribution of goods and services, thereby resulting in massive savings in logistics costs which could turn up as major improvements in corporate bottom lines and additional tax income; successfully closing the revenue-expenditure gap.
“It’s all about productivity enhancement and not hand-outs to the most vulnerable in the society the way it is done,” the report stated.