By FBNQuest Research
Our look today at state governments’ internally generated revenue (IGR) shows a decline in the aggregate collection from N801 billion to N756 billion in 2015.
Collection as a proportion of total revenue improved but perhaps the more important trend is that a minority of states is moving away from the rest.
Both Ogun and Enugu joined Lagos in achieving a ratio for IGR/total revenue above 50 percent in 2015. One other state (Rivers) managed 40 percent, three 30 percent (Kano, Oyo and Abia) and five 20 percent.
We are working with the data provided in the CBN annual reports, and sourced from the states themselves as well as the office of accountant-general of the federation.
Although not the most recent data, we stick with the CBN series for the sake of historical comparisons
States’ own figures quoted in the local media may not always be consistent with the CBN series. Enugu is reporting IGR of N12.4 billion in H1 2017, compared with a statutory allocation for the same period of N13.4 billion and IGR of N14 billion for 2016 (12 months).
The narrative from the Enugu state government is that it has been rewarded for prudent management and cooperation between its various collection agencies.
Others have chosen different routes to generate wealth and employment. Kaduna is privatizing state-owned companies, selling state housing and borrowing from the World Bank, having already overhauled its revenue service.
An alternative is borrowing from government bodies, an example being a N4bn MoU signed by Ebonyi state government and the Bank of Industry.
States have received a one-off boost from the Paris/London club refunds for overpayments dating back to 2005.
A first distribution of N523 billion was made in December, conditional upon an undertaking by the states to allocate 50 percent of receipts for salaries and pensions, and a second of N244 billion has followed.
Delta State has pledged to disburse half its latest refund accordingly, with the balance for priority projects and the payment of contractors. Some distributions by states have attracted negative comments.
Mr Babatunde Fowler, chairman of the Federal Inland Revenue Service and of the Joint Tax Board, has called upon state governments to devolve more authority to their revenue agencies. We endorse his call, which requires state governors to take a broader view of their obligations.
While a minority of states is ahead of the field in racing terms, more than one third (13) collected less than 10 percent of total revenue in 2015. These are not all states one would regard as resource-less and impoverished.
Blue-Chip Stocks Pull Back Market by 0.13% as Investors Lose N33bn
By Dipo Olowookere
The Nigerian Exchange (NGX) Limited was pulled back by 0.13 per cent on Tuesday by some blue-chip stocks on the platform, which succumbed to profit-taking.
This shrank the All-Share Index (ASI) by 67.98 points to 54,299.76 points from 54,367.74 points, as the market capitalisation moderated by N33 billion to N29.576 trillion from N29.609 trillion.
The stock market came under selling pressure yesterday as investors offloaded some equities in their portfolios. This was across the major sectors of the bourse.
At the close of business, the insurance counter lost 0.80 per cent, the banking index fell by 0.61 per cent, the industrial goods space depreciated by 0.31 per cent, and the consumer goods sector declined by 0.02 per cent.
However, the energy stood tall during the session as it went up by 0.54 per cent on the back of renewed interest in shares in the ecosystem due to the rise in the prices of crude oil in the international market influenced by earthquakes in Turkey and Syria.
Business Post reports that investor sentiment was weak on Tuesday due to a negative market breadth triggered by the losses printed by 27 stocks, which outweighed the 20 price gainers.
Top stocks like Dangote Cement, Cadbury Nigeria, Zenith Bank, FBN Holdings and Access Holdings depreciated during the session, but the worst-performing equity was Japaul, which fell by 9.38 per cent to 29 Kobo.
FCMB went down by 7.82 per cent to trade at N4.60, Royal Exchange declined by 7.32 per cent to 76 Kobo, UAC Nigeria crashed by 6.12 per cent to N9.20, and Linkage Assurance deflated by 6.12 per cent to 46 Kobo.
On the other side, Conoil ended the trading day as the best-performing stock after it chalked up 10.00 per cent to close at N29.15, as MRS Oil followed with a 9.82 per cent growth to finish at N21.25. International Energy Insurance rose by 9.35 per cent to N1.17, GlaxoSmithKline went up by 6.92 per cent to N6.95, and Coronation Insurance grew by 4.65 per cent to 45 Kobo.
On the activity chart, investors traded 200.0 million shares worth N7.6 billion in 4,380 deals on Tuesday compared with the 191.6 million shares worth N4.8 billion traded in 4,359 deals on Monday, representing an increase in the trading volume, value and the number of deals by 4.38 per cent, 58.33 per cent, and 0.48 per cent, respectively.
FCMB sold 28.0 million units, Geregu Power transacted 21.1 million units, Sterling Bank exchanged 18.8 million units, Transcorp traded 15.8 million units, and Zenith Bank executed 14.7 million units.
Court Remands Fund Managers Over N891m Capital Market Investment
By Aduragbemi Omiyale
Two fund managers, Mr Solomon Edet Solomon and Mr Zakari Haruna, have been remanded in Suleija Correctional Centre after they were arraigned for collecting about N891 million from members of the public through an unregistered investment company, Vektr Capital Global Group, contrary to the laws of Nigeria.
They were brought before Justice Zainab Abubakar of the Federal High Court, Court 4, Abuja, after the Securities and Exchange Commission (SEC) sealed up the Wuse Zone 5 office of Vektr Capital in March 2022 on suspicions of illegally collecting money from the investing public.
At the court, after the four-count charge was read to the suspects, Justice Abubakar fixed March 16, 2023, for the commencement of the trial.
In the charges, the defendants were alleged to have, on or between the years 2021 and 2022 within the jurisdiction of the court with intent to defraud, conspired amongst themselves together with one Kayode Sal Viktor and other staff to obtain the sum of over N891,729,000 from investing public, including Cordelia Ukomaka Ducke Eze and others under the false pretence that they were fund managers which you are not and thereby committed an offence contrary to Section 8 of the Advanced Fee Fraud and Fraud Related Offences Act 2006 and punishable under Section 1 (3) of the same Act.
“That you, M/s Vektr Capital Global Nigeria Ltd, on or between the year 2021 and 2022 within the jurisdiction of this court, did commit a felony to wit. Conspired among yourselves together with Kayode Sal Viktor and your other staff to do an illegal act- to lure and offer a subscription to an unregistered collective investment scheme valued over N891,000,000 to investing public, including Cordelia Ukomaka Ducke Eze and others and thereby committed an offence contrary to and punishable under Section 516 of Criminal Code Act, Laws of the Federation of Nigeria 2004.
“That you, M/s Vektr Capital Global Nigeria Ltd, on or between the year 2021 and 2022 within the jurisdiction of this court, did commit a felony to wit. Conspired among yourselves together with Kayode Sal Viktor and your other staff to do an illegal act- to lure and offer a subscription to an unregistered collective investment scheme valued over N891,000,000 to investing public, including Cordelia Ukomaka Ducke Eze and others and thereby committed an offence contrary to and punishable under Section 54 of the Investments and Securities Act, 2007,” the charge stated.
When the bail application came up for determination, the Justice said she had not been convinced, going by the affidavit that the accused will attend court to attend the trial and not jump bail.
Earlier, counsel to Mr Solomon urged the court to grant the defendant bail, stating that the defendant is only an employee of the company and not the owner.
However, Justice Abubakar declined to say that being an employee of the company is not enough for her to grant him bail but told the counsel that she needs to be convinced that if the defendant is granted bail, he will be available to attend the hearing and not jump bail.
“You know the provisions of the Administration of Criminal Justice on bail applications. He must meet those considerations. Show me in your affidavit of support where all these conditions have been listed as met to give me the assurance that the second defendant will at all times attend this trial in person. If I grant him bail based on what you have submitted, will I not be seen to be reckless as a judge?
“Granting bail is a discretionary power, and you must earn it; you must convince me. So many people jump bail cases will come up, and it cannot go on because the person has jumped bail. If you convince me because your conviction is on oath, I believe you. My concern is what you depose in your affidavit. I cannot, on the basis of this deposition, grant this person bail, and I cannot.
“According to Section 160, paragraph 8F, the applicant must have these facts in his affidavit to convince the court to grant him bail. If I grant bail and he decides to jump bail tomorrow, anyone that sees this application will say he did not commit himself,” she said.
Justice Abubakar stated that there are no vital assurances to convince the court to grant the defendant bail as contained in Section 160 of the Criminal Administrative Justice Act 2013 and enumerated in Paragraph 8f of the said Act, emphasising that It is important that the deposition must contain that vital information to convince and assure the court to grant the second defendant bail.
She subsequently ruled saying, “In the absence of this, this court cannot grant the second defendant bail. Accordingly, bail is refused”.
On the third defendant Mr Haruna, the judge stated that based on the propositions contained in the application submitted to the court for bail, particularly paragraphs 12-17, the court is inclined to grant bail to him.
“Accordingly, bail is granted to the third applicant in the sum of N100 million and one surety in the like sum. The surety must be a responsible, reputable person in the society as deposed to in the affidavit; the surety must own a landed property within the jurisdiction of this court whose title documents must be deposited with the Deputy Chief Registrar Litigation of this court after due verification.
“Both the third defendant and the surety must deposit two copies of their recent passport photographs with the Deputy Chief Registrar Litigation of this honourable court. The defendant must also deposit his international Passport with the Deputy Chief Registrar Litigation of this court. Bail is granted; those are the only conditions imposed”.
“Both the Second and Third defendants are to be remanded in Suleija Correctional Centre. A remand of the third defendant at the Suleija Correctional Centre is pending when he fulfils his bail conditions. Anytime he fulfils his bail conditions, he is free to go and enjoy his day,” Justice Abubakar stated.
FIRS, LIRS Partner to Reduce Compliance Costs for Taxpayers
By Aduragbemi Omiyale
A partnership aimed to reduce compliance costs for taxpayers in Nigeria has been entered into between the Federal Inland Revenue Service (FIRS) and the Lagos State Inland Revenue Service (LIRS).
Signing the Memorandum of Understanding (MoU) on the exchange of information and implementation of joint tax audit and investigation exercise on Monday, the Executive Chairman of LIRS, Mr Ayodele Subair, noted that the importance of the agreement was to foster greater collaboration between the two agencies.
He said though both tax agencies are not only independent of each other but different in the types of taxes they administer, the collaboration between the tax authorities was to promote the smooth operation of activities not only for the benefit of tax authorities but for improved service delivery for taxpayers.
“Notwithstanding its inclusion as a fundamental obligation of every Nigerian citizen pursuant to Section 24 (f) of the 1999 Constitution as amended, filing of annual income tax returns or payment of tax therefrom is not an issue that citizens are keen on.
“Nonetheless, citizens expect to have the direct benefit of democracy and good governance without remembering that the most reliable and sustainable means of Domestic Resource mobilization for government expenditure is taxation.
“There is no reason to debate the above as it has been established that tax compliance and good governance are expected to co-exist as the undividable social contract that binds citizens and governments anywhere in the world. Therefore, citizens and governments are expected to fulfil their end of the bargain in achieving a balance,” Mr Subair said.
He stated that, “Today’s signing of this Memorandum of Understanding is in furtherance of the above bargain on the part of the tax authorities. While this initiative of a joint audit is not a new one, it is peculiar because it comes at a time when our dear nation struggles with dwindling oil receipts and other economic woes which have affected the tax-to-GDP ratio, which is currently adjudged as the lowest globally, standing at approximately 6 per cent compared with our neighbouring countries which average between 15 per cent and 25 per cent.”
According to the LIRS Chairman, some of the expected achievements from this collaboration between both tax authorities include a reduction of compliance costs for taxpayers; improved transparency in the tax administration process, which will impact tax disputes, incidences and reconciliation; reduced administration costs for both tax authorities; and elimination of hiding place for recalcitrant taxable persons and entities.
In his remarks, the Executive Chairman of FIRS, Mr Muhammad Mamman Nami, said the essence of the collaboration between the FIRS and LIRS was to enable the two agencies to carry out joint projects together.
He also stated that in the course of its investigations, both parties would work as a team and ensure the automatic exchange of information, which would enable the agency to get more extensive data for seamless tax administration.
“We will work together as a team during the investigation and have an automatic exchange of information. With this, we will be able to carry out our mandate seamlessly. As part of the joint operation, we will be able to implement presumptive tax as far as issues of tax administration are concerned,” Mr Nami said.
Business Post gathered that the agreement signing ceremony, which took place at the Lagos State House, Marina, was witnessed by Lagos State Governor, Mr Babajide Sanwo-Olu; the Minister of State for Budget and National Planning, Mr Clement Agba; the Lagos State Commissioner for Finance, Mr Rabiu Olowo; and the Lagos State Attorney-General and Commissioner for Justice, Mr Moyosore Onigbanjo (SAN), among others.
While commenting on the development, Mr Sanwo-Olu disclosed that the conversation for the harmonisation of the two agencies’ mandates started about a year ago, based on the need to forge a common front in widening the tax net to raise the country’s tax to GDP ratio.
The Governor observed that Nigeria had maintained an unimpressive tax-to-GDP ratio of between 6 per cent and 8 per cent despite the yearly record-breaking turnovers by both FIRS and LIRS.
This, he said, has mounted pressure on the nation’s resources and created an imbalance in government expenditure, stressing that Nigeria must operate at the same level as other nations within sub-Saharan Africa, doing between 14 per cent and 15 per cent in tax to GDP ratio in order to support the government’s development programmes and improve accountability.
“We have just witnessed an epoch-making ceremony between the FIRS and the LIRS. This collaboration did not just happen by chance; it is a conversation we started about a year ago with the chairman of FIRS when both parties reviewed their successes and limitations. It was clear there was a need for a relationship to be consummated.
“Both FIRS and LIRS have been breaking records of their tax collection and administration yearly, but this is not enough. We have an unimpressive tax-to-GDP ratio, which ranges between six and eight per cent; this is totally unacceptable.
“Studies have shown that there would be better service delivery to the citizens and improvement in the efficiency of tax collection when the two agencies work together. The cost of tax collection would be reduced, we would see better customer satisfaction, and more resources would be generated for the government to deliver more dividends of democracy.
“For us as a state, we are humbled by this collaborative effort, and we believe our citizens will be the ultimate beneficiaries of this initiative. The MoU is in the best interest of the public, as it affirms the reason why we need to come together and strengthen the cordial working relationship between the two agencies,” he stated.
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