Ahead of the formal presentation of the 2023 budget proposal by President Muhammadu Buhari before a joint session of the National Assembly, Friday, the House of Representatives, on Thursday, approved N19.76 trillion total expenditure for the 2023 fiscal year and N8.437 trillion in new borrowings.
In the same vein, the lawmakers during the Committee of the Supply approved N10.6 trillion fiscal deficit against the proposed N11.3 trillion by Federal Government, up from the N7.35 trillion fiscal deficit for the 2022 fiscal year.
Other parameters approved include; 1.69mbpd crude oil production, $73 per barrel of crude oil with a view that the $3 increase up from $70 proposed by the Federal Government in the MTEF/FSP will result in saving of N155 billion as well as N437.57/$ exchange rate, with the view of bridging the gap between the official market and parallel market; and projected 3.75 per cent GDP growth rate, 17.16 per cent projected Inflation rate.
Breakdown of the Federal Government’s aggregate expenditure of N19.76 trillion includes; Statutory transfers of N722.11 billion; Debt Service estimate of N6.31 trillion; Sinking Fund of N247.7 billion; Pension, Gratuities & Retirees Benefits of N827.8 billion; N8.53 trillion total Recurrent (Non-debt); N827.8 billion MDAs Personnel Costs; N3.96 trillion for Capital expenditure (exclusive of Transfers); N350 billion Special Intervention (Recurrent); and N7 billion Special intervention (Capital).
The House also approved the sum of N1.7 trillion against the N3.6 trillion approved by the Senate as petroleum subsidy ceiling for the 2023 fiscal year.
According to the Deputy Chairman of, House Committee on Finance, Hon Saidu Abdullahi, who briefed Parliamentary Correspondents, the N1.7 trillion is to ensure savings of the sum of N737,306,443,151, thereby reducing the fiscal deficit of N11.3 trillion of the government to N10.563 trillion.
While responding to question on the disparity between the N3.6 trillion fuel subsidy approved by the Senate and the N1.7 trillion approved by the House, Hon Abdullahi assured that a Conference Committee will be set up to harmonise the report.
According to the report seen by Nigerian Tribune, the House urged Federal Government on the need to significantly reduce both waivers and tax exemptions of Corporate Organizations to cushion the effect of the budget deficit.
The House also tasked all revenue-generating agencies to reconcile their accounts with the Fiscal Responsibility Commission and the Office of the Accountant General of the Federation, and submit the report to the Senate and House Committee of Finance for consideration and approval.
The Parliament also underscored the need for a common electronic platform for reconciliations amongst the government MDAs, OAGF and Fiscal Responsibility Commission for effective monitoring and remittances, as well as ensure strict compliance with the Constitution, Fiscal Responsibility Act and other extant laws by all agencies of the Government with regards to revenue remittances.
The House also mandated all the relevant oversight Committees of the National Assembly to remove recycled projects in their budget proposal during the Committees’ budget defence, mainstreaming of annual GOEs’ budgets into the Federal Government budget processes to ensure the same level of scrutiny, procurement and monitoring exercise.
The House also resolved that 10 GEOs namely: NCC, CAC, NPA, NIMASA, NUPRC, NMPDRA, JAMB, NAFDAC out of 63 GOEs already enjoying the cost of collections with immediate effect, just like FIRS, CUSTOMS, to serve as a test case for other GOEs which can be added in the future the list of this GOEs includes, adding that the proposed 2023 Finance Bill should reflect the amendment of the existing Act and include the above-mentioned agencies.
According to the report of the joint Senate and House Committee on Finance on the 2023-2025 Medium Term Expenditure Framework and Fiscal Strategy Paper (FSP) adopted by the House, Federal Government’s 2023 aggregate expenditure is estimated at N19.76 trillion, N2.44 billion (14.1%) higher than in 2022.
This includes the provision of N1I.68 trillion for GOEs’ expenditures, grants/donor-funded projects/programmes amounting to N40.52 billion, and N1.77 trillion for multilateral and bilateral project-tied loans. The sums of N20.78 trillion and N23.05 trillion are projected to be spent by the FGN in 2024 and 2025, respectively.
The Companies Income Tax (CIT) projections are based on estimated nominal GDP, Companies’ Profitability Ratio, and further improvement in collection efficiency. The Gross Operating Surplus of firms for which CIT forecast was derived is assumed to average N9.3 trillion for 2023 to N10.6 trillion for 2024 and N11.2 trillion for 2025 after adjusting for firms in the informal sector.
“The VAT was projected using estimated aggregate nominal consumption, taking into account vatable items and collection efficiency. Consumption expenditure on which VAT is charged is assumed to increase from an average of N35 trillion in 2023, to N40 trillion in 2024 and N45 trillion in 2025 after adjusting for exemptions, zero-rated items and companies whose turnover falls below N25 million threshold Like the CIT, more VAT payers are expected to be brought into the tax net with the effective implementation of the provisions of the Finance Acts 2020 and 2021.
“The VAT projections over the medium term are based on holding the rate at 7.5%. In the medium term, Government will intensify efforts aimed at improving VAT coverage and collection efficiency.
“Wider coverage and improved collection efficiency will be achieved through nationwide VAT registration and monitoring, and deployment of ICT auto collect platforms in more sectors of the economy. In addition, the solution for deduction and remittance of VAT and WHT from State government contract payments is to be deployed in all the 36 states,” the report read in part.
In the bid to improve on revenue generation, the lawmakers also harped on the need to put in place robust and intensified anti-smuggling and border management towards blocking and minimizing revenue leakages. Adopt the use of Artificial Intelligence instrument for border surveillance under the e-Customs project in the bid to check smuggling and enhance revenue collections.
The Parliament also called for enhancement of Post Clearance Audit and Systems Audit risk management mechanisms to stimulate recovery of revenue losses; full implementation of Excise duty on Telecommunication Services, Alcoholic, Sugar-Sweetened Beverages (SSBs), Cigarettes and Tobacco products. Therefore, Excise revenue is expected to grow exponentially because of the introduction of the Telecommunication Service charge and SSBs.
Effective implementation of the Customs-Trade Modernization Project and ensuring that the modernized and digitized/computerized service do not lead to job losses. This is expected to quadruple customs collection from the current N210 billion per month. The Fast-Track Trader Programme will be upgraded to enhance trade facilitation.
The lawmakers also recommended the introduction of 2.5 per cent Export charge on the re-exportation of all imported goods as conveyed through the 2022 Fiscal Policy Measures; Series of Import Adjustment Tax (IAT) with additional levies on 172 tariff lines of the Extant ECOWAS CET; full implementation of the 2022 – 2026 ECOWAS Common External Tariff; introduction of green surcharge on imported vehicles and excise duty on gambling and lotteries including online betting as well as assessment and monitoring of all revenues collected on behalf of the Service by the various designated commercial banks.
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