N5.2tr flows into Federation Account in six months
By Patience Ikpeme
The sum total of N5.2 trillion revenue accrued into federation account in six months period , between January and June 2023.
Revenue Mobilisation Allocation And Fiscal Commission (RMAFC) made the disclosure Wednesday in a statement issued by its Executive Chairman, Mohammed Shehu.
The accured funds is said to be captured in the monthly report to the Federation Account Allocation Committee (FAAC) by the Central Bank of Nigeria (CBN) under the caption “CBN Federation Account Component Statement”.
According to Shehu, out of the total gross revenue inflows into the Federation Account, the sum of N627. 3 billion was NNPCL JV Petroleum Profit Tax (PPT) due, captured and recorded by the Federal Inland Revenue Service ( FIRS) but utilized by the NNPCL for other FGN obligations.
The Statement noted that, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) remitted the sum of N823.5 billon while the Federal Inland Revenue Service (FIRS) made a gross collection of N3.6 trillion but remitted N3.028 trillion retaining the difference as cost of collection. The Nigeria Customs Service (NCS) remitted the sum N764.6 billon.
The RMAFC chairman disclosed that NNPCL did not remit any amount into the Federation Account during the period either as profit revenue or other revenues as contained in the Petroleum Industry Act (PIA), 2021.
The commission which overseas the sharing of revenue to three tires of governments comprising federal government,states and local government councils said NNPL revenue performance could not be assessed because neither its revenue target was disclosed nor its revenue remittance to the Federation Account was provided.
According to the Commission N1.4 trillion was realized as Value Added Tax (VAT) while the sum of N83.024 billion was realized from the Electronic Money Transfer Levy (EMTL) from which the sum of N3.3 billion was paid to FIRS as cost of collection.
Additionally, the FIRS received the sum of N82. 031billion as cost of collection on PPT/CIT and EMTL collections respectively in the period.
The report revealed that on VAT, the FIRS/NCS together received the sum of N59. 5 billion as cost of collection within the period under review. The sum of N16.6 billion was realized from the solid minerals sector.
The RMAFC Chair further revealed that total collections from VAT netted the sum of N1. 3 trillion was shared to the 3-tiers of government in accordance with the approved VAT sharing formula.
“Furthermore, the sum of N1.1 billion was paid in the month of March, 2023 as Consultancy Fee on VAT”.
On the statutory allocations to the three tiers of government, Mr. Bello disclosed that the net sum of N3.069 billionwas shared to the 3-tiers of government in the period January to June, 2023.
In the area of payment of cost of collection to Revenue Generating Agencies (RGAs) from the Federation Account component, the statement reveals that the NCS received the sum of N53.5 billon while the NUPRC received the sum of N33.9 billion within the period under review.
In the same vein, the statement disclosed that the sum of N48.1 billion 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”.
In a similar development, the RMAFC Chair described the statutory deductions which constituted 32.27% of the total gross inflow into the Federation Account in the six month period as superfluous and constitute a drain on the Federation Account.
Mr. Shehu also disclosed that the sum of N1. 6 trillion was deducted at source by the OAGF as approved statutory deductions; with a further deduction of the sum of N70 billion (Seventy billion Naira) by the FIRS under the name of FIRS Priority Projects in the second quarter.
The Chairman observed that the Nigerian economy at the moment requires some pragmatic measures to enhance distributable revenues for the three tiers of government for the overall development and growth of the country.
According to the statement, the Commission has made far reaching recommendations on the operations and management of the Federation Account with particular reference to: Payment of cost of collection to RGAs which should be tied to revenue performance where each RGA should receive 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 include the need to review, holistically, all legislations with respect to statutory deductions to allow for increase in the amount to be shared among the 3-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 werededucted as first line charge under similar name, i.e. ‘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 3-tiers of government”, RMAFC Chairman noted
The Commission 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 in line with the new administration’s renewed hope agenda .
