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Nigeria’s tax reform committee proposes daily revenue-sharing between govt tiers

Published

7 months ago

June 4, 2024

The three levels of government in Nigeria will begin receiving allocations daily instead of monthly, according to plans announced by the Presidential Fiscal Policy and Tax Reform Committee.

Taiwo Oyedele, the committee’s chairman, made the revelation on Monday during a workshop for public consultation in Abuja where he emphasized the necessity to update the existing system, comparing it to outmoded customs that date back to 1814. In contrast to the customary monthly allocation sessions, FAAC will implement a daily payment method under the proposed change.

“We believe the system can be configured to credit the accounts of local, state, and federal governments daily,” Oyedele stated.

He disclosed that the Accountant General of the Federation is among the important players that support the proposed reform. He emphasized further that the change is intended to simplify operations by shifting the monthly FAAC meetings’ focus from routine reconciliations—which may be assigned to junior accountants—to national budgetary policies.

In response to questions about Nigeria’s collection expenses, which range from 4% to over 30%, Oyedele emphasized that “if an agency cannot collect revenue at 1%, it should not be collecting it at all.”

We are serious with the one per cent and it should cut across everybody, if you cannot collect revenue with one per cent, then you should not be collecting it at all. That’s why we were saying let government agencies focus on the primary reason they were set up for.”

He added, “If they are not set up to collect tax, they can’t be efficient and competent in doing it. Things will work better if everybody plays to their strength there’s a reason why every country has their revenue collection agency and not to replicate that function and expect that everything will be fine. A country like South Africa is under one per cent.”

This is an attempt to modernize the Federation Account Allocation Committee’s funding system.

Revenue sharing has been a critical subject in Nigeria’s federal system. Theoretically, resources are controlled by generating units and a higher sum of revenue is allocated to the generating sources under the current sharing arrangement however, the federal government takes 52.68% of the revenue sharing, states get 26.72% while local governments get 20.60%. The arrangement points to strong power and resource concentration in the central government, a situation that has fueled various agitations by different entities in the Nigerian state.

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IMF, Egypt reach agreement for fourth review of Egypt’s $1.2 billion loan request

Published

2 days ago

December 26, 2024

Ifeoluwa Dada

Egypt and the International Monetary Fund (IMF) have reached a staff-level agreement over the fourth review of the Extended Fund Facility arrangement, which might lead to a $1.2 billion payout under the program.

In March, Egypt, struggling with rising inflation and cash shortages, consented to the $8 billion, 46-month facility. Its economic problems were made worse by a precipitous drop in Suez Canal revenue over the last year due to regional tensions.

Over the next two years, Egypt’s government has committed to raising its tax-to-revenue ratio by 2% of GDP, according to the IMF, emphasising removing exemptions rather than raising taxes.

According to a statement from the IMF, this would allow it to expand social expenditure to support vulnerable populations.

“While the authorities’ plans to streamline and simplify the tax system are commendable, further reforms will be needed to enhance domestic revenue mobilization efforts,” the statement said.

According to the IMF statement, Egypt had also committed to maintaining its commitment to a flexible currency rate and to taking more urgent action to guarantee that the private sector became the primary driver of development.

The IMF’s executive board still has to accept the fourth review’s staff-level agreement.

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Libya’s eastern govt accepts petrol subsidy elimination

Published

2 days ago

December 26, 2024

Ifeoluwa Dada

In a recent statement, the eastern government of Libya claimed it had reached a consensus on a plan to eliminate gasoline subsidies and would draft a mechanism to carry out the accord.

Additional information on the idea was not released by the administration led by Osama Hamad, a challenger to the internationally acknowledged Tripoli-based government.

However, it is uncertain if Hamad’s government would be able to carry out the plan in the divided nation.

According to the Global Petrol Prices online tracker, a litre of gasoline costs just 0.150 Libyan dinars ($0.03) in OPEC member Libya, making it the second-cheapest in the world.

Following an uprising against former ruler Muammar Gaddafi in 2011, smuggling networks have thrived in the ensuing political unrest and armed fighting. In 2014, conflicting eastern and western governments separated the nation.

A World Bank analysis estimates that the annual value of fuel smuggling from Libya is at least $5 billion.

In a meeting with Mari Barrasi, the deputy governor of the Central Bank of Libya (CBL), located in Tripoli, and four members of the bank’s board of directors, Hamad in Benghazi supported the idea of removing subsidies.

The CBL’s Benghazi branch offices served as the venue for the conference.

The eastern parliament appointed Hamad in 2023 to succeed Abdulhamid Dbeibah, who had been put in position in 2021 under a U.N.-backed procedure that the parliament said had lost its legitimacy.

Dbeibah, who is located in Tripoli, stated in January that he will conduct a public poll on the topic of eliminating gasoline subsidies, but he hasn’t done anything about it since.

According to CBL figures, gasoline subsidies cost 12.8 billion Libyan dinars between January and November of this year. 4.8 Libyan dinars to $1 is the official exchange rate.