Lecture Government Revenue-1.pptx

z  PUBLIC OR GOVERNMENT REVENUE WHAT DO YOU KNOW ABOUT IT?  z Government revenue refers to the income generated by the government through various sources. In addition to all you know ,we should appreciate the following: z Sources of Government Revenue z...

z  PUBLIC OR GOVERNMENT REVENUE WHAT DO YOU KNOW ABOUT IT?  z Government revenue refers to the income generated by the government through various sources. In addition to all you know ,we should appreciate the following: z Sources of Government Revenue z Four main classes  Oil  None oil  Tax  None Tax z Nigeria Revenue structure  1. Direct taxes  a.Personal income tax  b.Company income tax.  a.Petroleum profit tax  (capital gains, stamp duties)  z 2. Indirect Taxes a. Import Duties (what is import duty and why should government place duty on importation.?)  z Export Duties. Research Team 1 Import prohibition in Nigeria:A Critique Outline Various govt policies on import prohibition.(Different years) The most recent prohibition by the current administration and its impact. z 3. Other Tax Revenue a. Mining (Rents, Royalty) b. Interest and Repayments c. Miscellaneous – licenses, fees, earnings and sales, rent on government property, reimbursements etc z Going by the 1999 constitution(As amended) There are revenue sources that are just for the federal govt one for the states and that of the local govt. The constitution is very clear on this. WHY? z To avoid conflict between states and local govt. Group B Impact of conflict on the Nigerian economy  z Revenue Sources of the Federal Government 1. Customs and Excise Sourced Revenue- these tariffs are tax imposed on imported goods 2. Import duties- most prominent ones are (a) Machinery, mechanical – appliances and Electrical Equipment's, vehicles, textiles, vegetable products, prepared food stuffs. Hides or skin leather petroleum b.  z Export c. Excise Duties- most outstanding excise duty earners are (a) liquidities natural gas, petroleum oil, fabricated metals. d. Custom fees: - penalties, overtime or shipping fees, rent on goods or vehicle transit l z Federal Licenses Five key federal revenue yielding licenses are (a) Goldsmith or Gold Dealer licenses (b) Wireless or television licenses ( c ) arms or Ammunition licenses (d) Import or export licenses (e) mining or quarrying licenses  z 3. Federal Taxes a. Petroleum profit tax b. Companies income tax (30%) c. Personal income tax (Armed forces, External Affairs personnel and residents of the federal capital territory  Capital gains tax, Stamp Duties, Airport tax, VAT.value added tax.(gains made from sale of stocks ,bonds. z 4.Federal Fees, fines, levies and penalties. -Federal high or Supreme  z Court fines.  -Agency fees, Barrister practicing fee, business name fee, company Registration fee, insurance company’s fees, police escort fees, travel certificate fees z 5.Royalties: oil or gas Royalties (b) limestone, z 6. Federal Earnings and Sales Aviation sales National sales, Nipost Postal Services Sales (stamps, p. o. Box, private mail Bags, Speed post). z 7.Armed Forces Revenue: personal income of the armed forces, rent sale of stores or clothing, school fees of command schools Armed Forces Band Earnings. z Interests And Repayments: . federal parastatals loan interest, federal parastatals stock interest, Nigerian overseas students loan interest. z STATES  What do you think about states’ revenue? z Internally generated revenue and revenue allocated from the Federation Account.  Internally generated revenue are those revenues that are derived within the state from various sources such as taxes (pay as you earn, direct assessment, capital gain taxes, etc), z Motor vehicle license, among others. Most states of the federation get the bulk of their revenue in form of statutory allocation from the federation account to finance their expenditure programmes. sources of revenue are by no means uniform among the states. States derive their revenue depending on the resources available to them  z Let us look at the revenue structure of the states as identified by 1999 constitution i) Taxes- personal income tax (excluding those of the Army, police, external Affairs and the federal capital territory). Entertainment tax, cattle tax. ii) fees-these are revenue collected by various ministries such as pools Agent, Application fees, contract or registration fees, and submission fees on certificate of occupancy etc. z Licenses:(pay attention to that of state and Federal) These include special marriage licenses renewal of licenses by contractor. These embrace motor vehicles and drivers’ licenses. Land registration and survey fees and fines imposed on offenders.  iii. Earnings from economic activities z Sources of local government revenue 1. Property taxes 2. Land registration 3. Market fees 4. Trading licenses 5. Registrations e.g. marriages (customary court) 6. Development rates 7. Liquor licenses 8. Right of occupancy fees. 9. Advertisement permit fees 10. Other fees fines and licenses. z All these are internal sources, which can either be expanded or contracted. for External sources a.Federation account allocation b. State allocation c. Grants z Let us look at sources  sources are taxes, Custom duties, sales of govt assets, revenue from solid mineral and agric resources,  Which one contributes more ?  z Revenue Collection Agencies in Nigeria . Sources and Classifications of Government Revenue in Nigeria . Federation Accounts Allocation Committee- FAAC. . State Joint Local Government Account Allocation Committee  Sources of Revenue Payable to the . z Federation Account . Federal Government Account or Consolidated Revenue Fund . Value-Added Tax (VAT) . Development Fund TREASURY SINGLE ACCOUNT (TSA)  z  Government requires revenue to perform its various functions. Hence, government strives to generate the revenue that it requires.  z  Why tax people?  how do they decide who pays how much?  z  Governments collect taxes to generate revenue needed to fund public services, infrastructure, and essential functions. Taxation ensures that the financial burden is shared among citizens based on their ability to pay. Various factors, such as income, property ownership, and consumption, influence the tax rates and distribution.  z Sources of revenue of various governments: ( a ) Taxation: It is a compulsory levy imposed by the government where no direct benefit is received by citizens from the government. The levy is Usually payable at different rates depending on the nature of economic activity conducted by an individual or firm.  z (b) Fees: these are payments made by users of public services on a cost sharing basis. (c) Fines: z refer to the penalties imposed by government against law breaches, i.e. any person or firm from which has been proved guilty by law must be exposed to specific fines as compensation for the destruction made by the person or firm and the collected amount being revenue for the government  z  (d) Grant: refer to non-payable money received by the government from  another government with the aim of helping such government either to  improve or to start a project which is of great importance to the society  of such government.  ( e) Foreign Investment: sometimes government may decide to invest  beyond its boundary provided there is a proof for sustainable and  profitability cash flow. The obtained amounts after operation constitute  revenue for the particular government.  z  (f ) Public Debt or borrowing: becomes an important source of income  to the government when revenue collected from taxes and other sources  is not adequate to cover government expenditure. Such borrowings  become more necessary in times of financial crises and emergency like  war, droughts, etc. Public debt may be raised internally or externally.  Internal debt refers to public debt floated within the country, while  external debt refers to loans floated outside the country.  z  (g) Sales of National Assets: selling national assets through privatization programmes have constituted a significant source of government revenue across the globe. Revenue from this source is usually used to improve finances or invest in new infrastructure and other key priorities z REVENUE COLLECTION AGENCIES IN NIGERIA Several Agencies are responsible for revenue collection.The major ones are discussed as follows:  z Nigerian National Petroleum Corporation (NNPC) NNPC came into being on the 1st of April 1977 through Decree No 33, following the dissolutions and mergers of the then Nigeria National Oil Corporation (NNOC) (Established by Decree No 18 of 1971) and the Federal Ministry of Petroleum Resources.. The establishment of NNPC was meant to optimize the use of scarce indigenous human resources available in the oil industry.  z Responsibility NNPC has sole responsibility for upstream and downstream developments, and is also charged with regulating and supervising the oil industry on behalf of the Nigerian Government. In 1988, the corporation was commercialised into 11 strategic business units, covering the entire spectrum of oil industry operations: exploration and production, gas development, refining, distribution, petrochemicals, engineering, and commercial investments.  z Its specific functions and roles include  (a) exploration and production, refining, purchasing and marketing  of petroleum, its products and by-products;  (b) providing and operating pipelines, tanker-ships and other  facilities for the conveyance of crude oil;  (c) constructing, equipping and maintaining tank farms;  z  (d) research and development; and  (e) doing anything for the purpose of giving effect to agreements entered into by the federal government with a view to seeking participation by the government or the corporation in activities connected with petroleum.  z Investigation.......................  A Taxing of technology: A major revenue loss for developing economy Taxing technology can indeed present significant challenges and potential revenue losses for developing economies like Nigeria. How?  z  A large number of businesses not paying taxes and misuse of collected taxes are significant problems in many developing economies, including Nigeria. z  THANK YOU