Home NEWS Federal Government Received N1.09tn From Indirect Taxes

Federal Government Received N1.09tn From Indirect Taxes

by InlandTown Editor
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According to data from the National Bureau of Statistics (NBS), the Federal government received N1.09tn from indirect taxes in the first two quarters of 2022.

These statistics represent a 10.2 percent increase from N984.33bn obtained in the first two quarters of 2021.

Indirect taxes are taxes paid to the government by a manufacturer or retailer and later passed on to the consumer. They include charges like value-added taxes (VAT), and customs or import duties, among others. Indirect taxes are calculated based on current basic prices.

These figures were revealed by the NBS in its recent Gross Domestic Product report where it disclosed that the nation’s GDP grew by 3.54 percent in real terms in the second quarter of 2022. It also stated that aggregate GDP stood at N45.01tn in nominal terms.

The gross domestic product data reveal a steady growth of indirect taxes. The taxes grew from N636.19bn in Q1 and Q2 of 2020 to N984.33bn in the corresponding period of 2021, rising to N1.09tn in the same period of 2022.

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Lately, the Federal government has made attempts to increase its non-oil revenues, especially tax revenues due to the decrease in oil income revenues.

In its 2023-2035 Medium Term Expenditure Framework & Fiscal Strategy Paper, the government said, “Revenue generation remains the major fiscal challenge of the Federal Government.

“The systemic resource mobilization problem has been compounded by recent economic recessions. Recognizing that domestic revenue mobilization is important for sustainable development, the Federal Government has instituted the Strategic Revenue Growth Initiatives to improve government revenue and entrench fiscal prudence, with emphasis on achieving value for money.

“These measures include improving the tax administration framework, including tax filing and payment; as well as the introduction of new and/or further increases in existing pro-heath taxes like excise on sugar-sweetened beverages, tobacco, and alcohol. Mixed reactions have greeted the implementation of these measures.”

The government said that tax would remain within the time period, but there would be growth in different taxes taking into account improvements in the operations of the various tax administrators.

It also hopes that consumption expenditure on which VAT could be charged would increase from N53tn in 2023 to N40tn in 2024, and N45tn in 2025.

Commenting on this growth, Associate Professor of Economics at the Pan Atlantic University, Olalekan Aworinde, said,

“What this implies is that the government is trying to expand the tax net. It is indirect taxes, probably taxes on telecoms, or it could also be on import and excise duty.

“It is good, meaning the government is trying to bring in more revenue in terms of taxes instead of relying on oil prices. What they need to do is to look at that avenue where they are getting this result and develop them properly so that they don’t just milk it without investing in it to grow.”

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