The Centre for the Study of the Economies of Africa (CSEA), a leading economic research and analysis organisation, has advised federal and state governments in Nigeria to invest in and deploy appropriate technology in order to plug leakages in their tax revenue generation.
The research firm, in its just published Nigeria Economic Update Issue 8, noted that as Nigeria continued to contend with the volatility of the international oil market with the attendant negative implications for her revenue accruals from the oil sector, the need to automate tax administration at all tiers of government had become more imperative.
The CSEA researchers in the report cited the recently released Budget Implementation Report, which showed that gross total revenue generated in the third quarter (Q3) of 2020, declined by 3.07 percent relative to the previous quarter’s accruals
Specifically, the budget Implementation Report indicated that gross total revenue fell to N1.88 trillion in Q3 2020 from N1.94 trillion in the preceding quarter.
According to the Report, further disaggregation of the revenue shows that gross oil revenue fell to N813.59 billion in Q3 2020 from N1.02 trillion in the previous quarter while gross non-oil revenue grew to N1.07 trillion in Q3 2020 from N921.53 billion.
The fiscal authorities primarily attributed the decline in total gross revenue to a 20 percent fall in gross oil revenue which outweighed a 15.7 percent increase in gross non-oil revenue.
Having critically appraised the revenue trend, the CSEA experts projected that going forward, government revenue is expected to recover by 2022 as the oil market stabilizes and tax receipts from non-oil sectors increase with improved economic activities.
The CSEA further clarified: “However, a large share of the economy remains informal with implications on the size of tax revenue raised. Even for businesses in the formal economy, a sizeable number of businesses continue to evade tax, leading to leakages in the system.
“Consequently, informality and tax evasion will have to be addressed using technology to improve data collection and monitoring of firms”, the research firm added.