Higher taxes, oil revenues boost FG’s earnings to N12.5 trillion in 2023

• The Federal Government’s earnings increased by 76 per cent to N12.5 trillion in 2023
• The increase is driven by higher taxes and oil revenues
• The tax revenue sources include VAT, CIT, and customs duties, among others

The increase in taxes and oil revenues contributed to the 76 per cent rise in the Federal Government’s earnings in 2023.

According to the recently released 2025-2027 Medium Term Expenditure Framework and Fiscal Strategy Paper (MTEF-FSP) from the Ministry of Budget and Economic Planning, the Federal Government’s earnings rose from N7.1 trillion in 2022 to N12.5 trillion in 2023.

The document also revealed that of the N12.5 trillion total earnings, oil revenue grew by 200 per cent from N0.8 trillion in 2022 to N2.4 trillion in 2023, representing 19.2 per cent of the total revenue.

The increase in oil revenue is largely due to higher crude oil production, which increased from an average of 1.31 million barrels per day (mbpd) in 2022 to 1.41mbpd in 2023.

On the other hand, non-oil revenue increased by 57.8 per cent from N6.4 trillion in 2022 to N10.1 trillion in 2023, which is 80.8 per cent of the total revenue.

Projected versus realised revenue

The projected actual gross oil and gas revenue in 2023 was N9.38 trillion. However, N7.87 trillion was realised, representing an 83.9 per cent performance. The net oil and gas revenue which accrued to the Federation Account after deductions was N4.93 trillion.

The actual revenue projected in the 2023 budget was N11.05 trillion, but N12.84 trillion was realised. Of this actual revenue, oil revenue was N2.38 trillion (6.6 per cent over the target), while non-oil tax revenue was N3.31 trillion (34.3 per cent above the target).

Other sources of government’s earnings

Under the Federal Government’s non-oil tax revenue, Companies Income Tax (CIT) and Value Added Tax (VAT) contributed N1.92 trillion and N476.11 billion, respectively, which is 106.1 per cent and 24.3 per cent above the budget.

The total amount collected as import duties, excise and fees was N781.80 billion, while N107.47 billion was from Special Levies, bringing the total collections by the Nigerian Customs Service to N889.27 billion.

The Federal Government also realised N23.65 billion from the Electronic Money Transfer Levy (EMTL).

Other revenues collected by the Federal Government include independent revenues of N1.84 trillion, a draw-down of N159 billion from Special Accounts, a signature bonus of N256.99 billion, and an Education Tax of N719.44 billion. The retained revenue of Government Owned Enterprises (GOEs) was N2.19 trillion, while grants/aid was N1.57 trillion.

Tax reform policies will improve revenue –Budget Office

Commenting on the MTEF document, the Budget Office noted that increased earnings are expected as the government’s reforms begin to take root.

The office added that increased revenue is crucial for the government to meet its fiscal obligations and implement programmes and projects.

It stated, “The expectation is for increased and sustainable revenue streams as the positive effects of the diverse reforms begin to yield the desired results.

“The government will therefore be able to meet its fiscal obligations and implement programmes and projects articulated in the Renewed Hope Agenda of the current Administration.

“While the increase in the non-oil revenue raises the tax-to-GDP ratio, Nigeria still ranks low when compared with nations with similar economic potentials.

“This narrative could possibly change with the full implementation of the recommendations of the Presidential tax reform committee.”

Nigerian government projects N44 trillion revenue, northern governors oppose tax review

Meanwhile, TheRadar reported that the Federal Government of Nigeria is pursuing ambitious tax reforms aimed at raising the country’s tax-to-Gross Domestic Product (GDP) ratio to 18 per cent by 2026. 

At the current ratio of 10 percent, achieving the proposed target means Nigeria must generate approximately N44.34 trillion in tax revenue, a significant increase from the current figures.