Still weak non-oil tax generation

Based on analysis of data produced by the Central Bank of Nigeria for Q2 2011 suggests that non-oil tax collection continues to disappoint. At N541bn, it was 1.7% below the proportionate estimate in the approved 2011 budget but 24.9% above the total collected in Q2 2010. It represented 22% of total gross federally collectible revenue in the period.

• Total revenue collection in 2010 was equivalent to 24.7% of GDP. At first glance, this may appear a decent effort, given the ratios in South Africa and Kenya last year of 24.0% and 22.0%.
• This comparison, however, overlooks the fact that the accounts of the NNPC, and thus the corporation’s share of crude oil and gas sales, are incorporated in the federal budget. When we deduct these sales, the total revenue/GDP ratio falls to 19.0%. (An analysis of net revenue collected would take account of the payment of cash calls).
• We should also recall that Nigeria enjoyed firmer oil prices in 2010. The ratio the previous year stood at 19.2% and 15.7% with and without the same sales respectively. 
• Tax collection is also inadequate in another sense: namely its capacity to meet spending demands including, admittedly, some onerous recurrent items. The federal government reported its sixth successive quarterly deficit in Q2 2011 even though total expenditure was 31.5% below the proportionate budget estimate (due to delayed capital outlays).