By Omoh Gabriel, Business Editor
2009 Budget under-performed by 45%, Govt inaugurates Task Force on Customs
ABUJAâ€”The Federal Government is in a fixed on how to generate more non-oil income for next year.
The direct implication is that the noose will be tightened around tax evaders while some concessions are to be withdrawn.
Also, revenue from custom activities will be rejuvenated through a Customs administration reform.
The Minister of Finance, Dr. Mansur Murhtar, stated this yesterday while giving the breakdown of the 2010 budget in Abuja at a briefing.
On the fresh revenue drive, the minister said; â€œOn-going and envisaged interventions in this very important area include: deepening of tax_administration reform by the Federal Inland Revenue Service; the inauguration of the Presidential Task Force on Customs Reform; and rationalisation of tax waivers, exemptions and incentives.
â€œI would also like to mention the inauguration and constitution of the Presidential Task Force on Customs Reform. The Task Force was granted an initial tenure of two years to carry out its assignment effectively and comprehensively and to enable the crystallization of major reorganization and transformation of the Nigeria Customs Service (NCS) into a modern institution capable of enhancing revenue generation, facilitating trade and curbing inefficiencies, all of which are critical to Nigeriaâ€™s Vision 20:2020 and the implementation of its Seven-Point Agenda.
â€˜â€™The Presidential Task Force is required to oversee on behalf of the Nigeria Customs Service Board (NCSB), the implementation of an Agreed Action Plan for the structural transformation of the NCS into an efficient, work-class organization, involving an overhaul of governance, organizational and leadership structures, systems, processes and procedures.
â€˜â€™The envisaged Custom reforms and modernization aim at achieving the following specific objectives, among others: (i) establishingÂ new institutional framework; (ii) enhancing the operational effectiveness and efficiency via modernization of Customs policies, processes and procedures; (iii) transforming the NCSâ€™s human resource base; (iv) institutionalizing trade facilitation; (v) enhancing revenue collection; and (vi) improving business environment and Nigeriaâ€™s competitiveness.
Reforms hinged on 7-Point agenda, Vision 20-2020
According to the minister, â€œThe Federal Government is currently undertaking far-reaching economic reforms that are anchored on Mr. Presidentâ€™s Seven-Point Agenda and the National Vision 20:2020 strategic development initiative.
The Seven-Point Agenda encompasses the key issues of infrastructure development (power, energy and transport); land reform; human capital development; law, order and security; food security and agriculture; wealth creation and the Niger Delta.
â€œThe long-term economic development strategy of the government is anchored on the Vision 20:2020. The key element of the vision is to achieve a double-digit real GDP growth, with a view to placing Nigeria among the top 20 economies by 2020. Massive investments are currently being undertaken to revamp infrastructure, agriculture, roads and railways rehabilitation, as well as ensure peace and security of lives and properties in the country,â€ he added.
2009 budget under- performed
Murhtar noted that the 2009 capital budget was only 44.55 per cent implemented in the first three quarters of the year. He added that between January and September, the revenue from oil and non-oil sources were below projections.
In this connection, the aggregate revenue available for distribution to the three tiers of government fell short of projected estimate of N2.68755 trillion by N666.07 billion or 24.8 per cent.
He said: â€œThe capital budget implementation averaged 44.55 per cent during the first three quarters of 2009. Although lower than expected, this represents a significant improvement over the first quarter performance of about 21 per cent.
It must, however, be mentioned that a number of MDAs utilized over 70 per cent of the capital vote released to them.
â€œStrategies towards improving capital budget execution rate, which have begun to yield results, as shown in improved capital implementation ratio of about 50 per cent by end-October 2009 have entailed: monitoring and tracking of budget execution at the Federal Executive Council level; simplification of the procurement procedures; and strengthening of MDAâ€™s implementation capacity.
â€œAside these efforts, I would like to mention that oil prices recovered during the year from a low of US$37/barrel recorded in December 2008 to the present level of about US$79/barrel. The success of the Amnesty Programme is also impacting positively on oil production with consequent impact on revenue generation.
â€œThe ability of the Federal Ministry of Finance to make full releases, despite the lower-than-expected revenue between January and September 2009, was made possible by withdrawing from the Excess Crude Account and securing confessional financing.
This has enabled us to preserve the key expenditure items in the 2009 budget, more especially critical infrastructure. Total releases for FGN budgetary expenditure during the period under review was N2.4 trillion. Of this amount, recurrent (non-debt) expenditure was N1.21 trillion (or 50.42%), recurrent (debt) expenditure N227.36billion (or 9.47%), capital expenditure and statutory transfers were N 829.12 billion or 34.55 per cent and N 127.94Â billion (or 5.33 per cent respectively
â€œFiscal policy during the 2009 continued to support macro-economic stability, as well as increased spending on critical infrastructure to diversify the base of the economy.
â€œAt the Federal Government Budget level, oil revenue under-performed by N171.73 billion (or 23.63 per cent relative to the projected level of N 726.8 billion. Similarly, non-oil revenue underperformed by N 274.3 billion relative to the projected level of N 662.07 billion.
The total revenue available for implementation of the Federal Governmentâ€™s budget, including the budgeted unspent balance of N225 billion for the first half of 2009 from the 2008 fiscal year), consequently fell short of its budgeted estimate of N1,698.9 billion by N 404.59 billion or 23.81 per cent, the lower-than-envisaged revenue has culminated in increased efforts towards improving revenue performance.
Effort at deregulation
The minister said, â€œThe government has also been working very hard in reforming the downstream petroleum sector with a view to removing the inefficiencies that have bedevilled the sector, enhancing competition as well as ensuring adequate supply of petroleum products. The dependence on imports, inadequate supply and distribution infrastructure and poor condition of the refineries underscore the necessity for a change in government policy in the downstream petroleum sector.
As a nation, we have spent huge amounts of resources over the years, purportedly to subsidize domestic consumption of petroleum products, which has bred huge inefficiencies and rent-seeking activities in the downstream petroleum sector.Â In 2006, it was N255.7 billion, it rose to N290.4 billion in 2007, and nearly tripled to N654.7 billion in 2008.
We envisage spending about N600 billion in 2009. Distinguished ladies and gentlemen, in 2008, the actual subsidy payment by the Federal Government was about 65 per cent the size of actual Federal Government Capital Expenditure.
The projected Federal Government subsidy payment for 2009 is about 117 per cent of the total amount allocated to critical infrastructure (Power, Aviation, Petroleum Resources, Works, Transport and infrastructural projects within the Federal Capital Territory).
The estimated Federal Government subsidy payment is about 186 per cent the budgeted capital expenditure for Human Capital Development (Health, Education, MDGs Conditional Grants and MDGs Quick Wins Projects). This clearly is untenable and unsustainable.
â€œGovernment is not unmindful of the need to put in place programmes and projects that would help alleviate the possible adverse impact of the envisaged reforms in the downstream petroleum sector, most especially the cost of transportation.
In this context, the National Assembly has graciously approved a supplementary budget for additional poverty-alleviation interventions, provision of rail mass transit services to selected cities, road mass transit schemes, emergency road rehabilitation as well as provision of low income housing scheme and civil servants mortgage scheme.
â€˜â€™The overall thrusts of these envisaged policy measures are to reduce the cost of transportation and make available alternative sources of transportation, seek avenues for reducing the cost of living as well as generate additional employment opportunities.and technical assistance).