Lately, Nigerians have witnessed a more aggressive revenue effort by the government via the announcement of new taxes and levies on the citizenry. These include the rather controversial increase in VAT from 5% to 7.5%, indication from the minister of works that toll gates on federal roads would return and the more recent introduction of a card renewal and maintenance fee on National ID cards by the NIMC, not to mention recent charges
on online and POS transactions.
The FGN’s aggressive revenue drive coupled with increased borrowings begs the question as to the financial status of the federation. Looking at the actual revenue performance of the FGN as of H1- 2019 versus the budgeted revenue for 2019, only 2 9.1% of the projected revenue has been achieved.
Shockingly, the minister of finance noted that it is impossible to meet 8 0% revenue performance by year-end. Additionally, Nigeria’s debt profile as of June 2019 was reported at N2 0.4tn, up 6.2% from December 2018. Assessing the severity of debt burden using the ratio of the FGN’s actual revenue to debt servicing cost as at June 2019, debt service to actual revenue stood at 5 4%, implying the FGN spent N5 4 out of every N100 revenue on debt servicing!
Clearly, the above questions the sustainability of the FGN’s fiscal operation and provides an insight into recent aggressive revenue drive. Certainty, whether Nigeria is broke or not depends on the actions or inactions of the government going forward.
UNITED CAPITAL RESEARCH