Analysts hiss as FG celebrates N5.6 trn H1 tax income
Sopuruchi Onwuka
Federal government recorded slight increment in tax revenues in the first half of the year despite the palpable depression in the economy associated with depreciation in the value of the Naira and jumps in inflation.
The N5.6 trillion announced by the Federal Inland Revenue Service (FIRS) might project annual N11.2 trillion for the year in cash volume but might be far less in value following the devaluation of the Naira and prevailing jumps in the prices of products and services.
According to the FIRS, non-oil sector contributed 69% of the total tax collection and the petroleum industry accounted for the rest of the taxes.
The highest amount of N1.65 trillion was collected in June alone, explaining the desperation of the new administration of the federal government to pool in funds to create initial impression following the spate of public outcry associated with the suspension of social benefits like the fuel subsidy.
Analysts who spoke with The Oracle Today point at the recent gallops in the prices of fuel as major inflation trigger that could wipe out significant value from internal tax revenues, adding that the real value of Naira based revenues would be determined by the foreign exchange worth.
The Oracle Today reports that the official exchange rate for the dollar was N450 and fuel price was N185 per liter when the revenue target of N5.3 trillion was set by the government for the period.
Even though the Executive Chairman of FIRS, Muhammad Nami, expects the tax collections to improve further in the second half of the year, real value of collection might not reach the N10.1 trillion for the same period last year.
“This half-year performance was achieved as a result of improved voluntary tax compliance by taxpayers, the continued improvement of automation of our tax administration processes, including the updated VAT filing processes; as well as our dogged engagement with stakeholders in both the formal and informal sectors of the economy,” Nami said.
“This is a good head start as we work toward meeting our target for the year, despite stubborn headwinds such as the impact of the currency redesign and 2023 general elections on the economy in the first and second quarters of 2023,” he said.
“We believe that the performance in the second half of the year would be better considering the continuing improvement to our tax administration processes and positive impact of current government’s policies on the economy.”
