Topic: BUDGETING,TAXATION AND REVENUE GENERATION IN NIGERIA:
The Road Map for Economic Revitalization.
Introduction
•Nigeria 12th largest producer of oil, 8th largest exporter, and has the 10th largest proven reserves in world.
•Oil account for 40 percent of Nigeria's GDP and 80 percent of its earnings.
•Nigeria’s economy is dependent on income from oil.
•Huge income over the years, encouraged companies and other tax payers to evade tax payment
•Neglect of oversight function on tax compliance, tax regulation and payment, encouraged tax evasion and avoidance
•Revenue from oil in Nigerian has shrunk in recent past. Due to the fall in the selling price of crude oil in the world market and pipeline vandalisation
•Nigeria’s economy is dependent on income from oil.
•Huge income over the years, encouraged companies and other tax payers to evade tax payment
•Neglect of oversight function on tax compliance, tax regulation and payment, encouraged tax evasion and avoidance
•Revenue from oil in Nigerian has shrunk in recent past. Due to the fall in the selling price of crude oil in the world market and pipeline vandalisation
Prof. Muhammad Tanko.(Bsc,MSc,Ph.D,FCA,FNAN)
Introduction Continued
•
Since our foreign exchange mainly comes
from the sale of crude oil at the international market, the prices of which
nosedived, by more than 70 percent, from $110 a barrel in June 2014 to the
price of less than $50 per barrel.
•
Therefore, with the present difficulty
in the sale of crude oil at the international market, vandalisation of
pipeline, which has tremendously affected the volume of production shows that
government has to look inwards to generate more revenue for governance,
•
One of those identified sources is
“taxation” which is a means of gaining more revenue. The only solution to
enforce and encourage tax compliance now is through rigorous effort by tax
authorities.
BUDGETING: Typologies & Conceptual
Clarity
•
Budgeting:
Different approaches
•
Incremental
(Line item) Budgeting Process;
•
Planning,
Programming & Performance Budgeting Process;
•
Zero-based
Budgeting.
•
As
“operational activities” that must be contrasted to a plan which is a “blue
print for action”
•
A budget is an
instrument that stipulates government policies and programs that eventually
actualizes its objectives.
•
While budget
is seen an instrument, budgeting can be considered as the process of
operationalizing the activities within budget in line with pre-set plans.
•
Also budget is
a framework that explains revenue and expenditure profile of government over a
specified period.
•
It is also a
tool for selecting a mix of public and private goods and services. In the
public sector, budget performs the same allocative functions that the price
mechanism performs in the private sector.
•
As
“operational activities” that must be contrasted to a plan which is a “blue
print for action”
•
A budget is an
instrument that stipulates government policies and programs that eventually
actualizes its objectives.
•
While budget
is seen an instrument, budgeting can be considered as the process of operational
zing the activities within budget in line with pre-set plans.
•
Also budget is
a framework that explains revenue and expenditure profile of government over a
specified period.
•
It is also a
tool for selecting a mix of public and private goods and services. In the
public sector, budget performs the same allocative functions that the price
mechanism performs in the private sector.
•
ZBB is
considered a process that ensures distribution of resources based on the
efficiency of identified priority project areas that achieves desired objective
rather than the use of incremental or historical basis. It assumes a review of
all projects at the beginning of the budget process with existing and proposed
programs rated on equal footing.
•
This negates
the practice of topping the existing allocation every year. ZBB ensures prudent
allocation of resources and ensures efficiency by constantly monitoring the
performance of the budget by all agencies, thereby ensuring that discipline is
attained as a major performance indicator.
•
Two
fundamental and indefinable characteristics of the ZBB system. Firstly, budgets
are prepared separately in each government department or unit. Secondly, each
unit or departmental head separately prioritizes the budgets at every level and
each higher-level manager again prioritizes the budgets.
Budgeting:
ZBB
•
In a way, it can be observed that ZBB
starts with zero allocation until and unless the unit manager is able to make a
case for the allocation of resources to the project.
•
Empirically, researches have documented
significant difference in the effectiveness of budgets in terms of
implementation between ZBB and other forms of budgeting.
•
It is established that application of
zero base budgeting tends to be performance driven and with necessary
adjustment taken to improve the optimal utilization of resources.
•
Furthermore, we have documented improved
budget performance with the implementation of ZBB by both the federal and
Kaduna state government
ENHANCING REVENUE GENERATION THROUGH TAXATION
•
Taxation is a means of regulating the
economy of a nation by way of imposing control measures to carefully manipulate
excesses of the economy to a desired level.
Excess tax controls excess liquidity in the economy and vice versa.
•
Moreover, taxation serves as a
means of checking security and information flow in terms of citizens’ choice and
preferences.
•
However, scholars view the term taxation
and its role from different perspectives.
•
For example, taxes represent amount
compulsorily levied by government on citizens and their investments which
enables the state to carry out the functions of governance.
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