Non-oil Revenue Research Articles

Impact of Tax Revenue on Economic Growth in Nigeria

The study investigated the impact of tax revenue on economic growth in Nigeria, Annual time series data were obtained from the Central Bank of Nigeria Statistical Bulletin for the period 1981 to 2015 on the variables used for the study. Unit root test was conducted using Augmented Dickey-Fuller test technique and the result showed that the variables were stationary though at different levels. Co-integration test was also conducted using Johanssen co-integration test method and the result showed that the variables in the model were co-integrated meaning that the variables have a long run relationship. The regression result showed that petroleum profit tax, company income tax and custom and excise duty have a positive and insignificant impact on the economic growth in Nigeria. Non oil revenue has a positive and significant impact on the economic growth in Nigeria. The R-squared value showed that about 98.4 percent of the total variations in the dependent variable were explained by changes in the explanatory variables. The error correction result showed that the speed of adjustment to long run equilibrium is 52.4 percent when any past deviation must be corrected in the present period. Based on the findings, it was recommended that government agencies responsible for administration and collection of taxes should ensure that there is effective supervision and monitoring of all taxable activities so as to ensure that tax avoidance and tax evasion are reduced as this will help in generating more tax revenue for the government. Government should also ensure that all revenues collected (tax revenues and non-oil revenue) are transparently accounted for. Moreover, government should ensure tax revenues collected are used to provide adequate social amenities to the citizens as this will motivate them in complying to tax laws. Keywords: Petroleum profit tax, Company income tax, Tax revenue, Economic growth DOI : 10.7176/EJBM/11-24-02 Publication date : August 31 st 2019

Central African Economic and Monetary Community (CEMAC)

The regional strategy has helped stabilize the regional economic position thanks to large fiscal consolidation efforts, a tighter monetary policy, and external financial assistance. The external position improved, and external reserves picked up. However, the region remains dependent on oil revenues, with little progress in economic diversification, under-performing budget non-oil revenues and weaknesses in the financial sector. The policy assurances included in BEAC’s letter of December 2018 were implemented as planned and the CEMAC authorities reiterated their full commitment to the strategy and their readiness to implement additional corrective measures if needed. Progress was made towards new IMF-supported program in Congo and Equatorial Guinea.

A RELATIVE ASSESSMENT OF THE CONTRIBUTIONS OF AGRICULTURE, OIL AND NON-OIL TAX REVENUES TO NIGERIA’S ECONOMIC EXPANSION

The decline in oil prices globally has led to diversification of economy in most oil enriched countries. In Nigeria, more attention is given to agriculture and non-tax revenue sources to ensure that the country overcomes a mono-economy syndrome which has affected the nation in the past. This study assesses the contributions of agriculture, oil and non-oil tax revenue to economic expansion in Nigeria using data that cover a period from 1981 to 2017. The regression results indicate that oil revenue has a significant negative impact on economic growth which is represented by gross domestic product. On the contrary, the study finds evidence that agriculture and non-oil tax revenue have a robust significant and positive influence on economic growth. Therefore, the study suggests that tax administration in Nigeria should be more business-growth conscious and that agriculture should be given a boost by creating an enabling environment that could attract foreign direct investments in the agricultural sector. The study also recommends that oil revenues should be utilized for reinvestments into other sectors of the economy. Keywords: Oil revenue, non-oil tax revenue, agriculture, economic growth, Nigeria.JEL Classifications: H27, H24, H25, N5, O4

Tax Revenue, Wage Employment and Economic Growth in Nigeria

This study examines the relationship between tax revenue, wage employment, and economic growth in Nigeria from 1981 – 2016 using the OLS technique. Tax revenue was captured by government non-oil revenue, while wage employment and economic growth were proxied by Wage and salaried workers (employees) and real GDP respectively. Empirical results showed that tax revenue, wage employment and foreign direct investment had a positive and significant impact on real GDP, while inflation rate had a negative and insignificant impact on real GDP. On the basis of the above, the study recommended the introduction of more programs like the Voluntary Asset and Income Declaration Scheme (VAIDS). Also, revenue from tax should be invested in projects that would generate employment opportunities for the people, especially the youths. Keywords: Tax Revenue, Wage Employment, Economic Growth. DOI : 10.7176/JESD/10-10-11 Publication date :May 31 st 2019

Natural resources governance and tax revenue mobilization in sub saharan Africa: The role of EITI

The resource curse literature suggests that windfall revenues from the exploitation of natural resources have a negative impact on non-resource tax revenues. Consequently, improving governance and transparency in the management of natural resource revenues is considered critical in mitigating the negative outcomes that typify resource-rich countries. This paper investigates whether EITI membership helps countries to offset the negative impact of natural resource dependence on tax revenues in a panel of 31 Sub Saharan African countries with significant natural resource endowments. Using panel fixed effects and dynamic panel GMM econometric methods, results confirm the existence of a negative relationship between revenues from natural resource sectors and tax revenues. Membership to the EITI has had a weak positive effect on non-oil revenue mobilization and only partially offsets the negative impact of natural resources dependence on non-resource tax revenues. These results suggest that while the EITI has had some positive contributions, it is not a panacea for eliminating the tax revenue curse in natural resource rich African countries.

Fiscal sustainability challenges in the new normal of low oil prices

PurposeGiven the persistence of low oil prices and the continued shrinking of government revenues, Gulf Cooperation Council (GCC) countries continue to adapt to the new normal of the oil price environment, with a focus on pressing ahead with subsidies’ reforms and measures to increase non-oil revenues, as well as accelerating debt issuance, which raise concerns about fiscal sustainability and the implications on macroeconomic stability.Design/methodology/approachThe purpose of this paper is to examine the sustainability of fiscal policy in GCC by exploring governments’ reaction to rising public debt accumulation via the estimation of a fiscal reaction function to higher debt. Subsequently, the paper compares the obtained results with other similar and non-similar groups, in terms of economic structures and oil dependency, to understand how some macroeconomic factors affect differently the fiscal policy responses, in a context of oil price shocks and high price volatility.FindingsThe results show that the coefficient of the lagged debt stock was significant and positive, which means that GCC are increasing the pace of reforms and the fiscal primary balance as they issue more debt to ensure a sustainable fiscal policy. The evidence is consistent with the theory that higher levels of debt warrant greater fiscal effort, but at lower debt levels, countries still have the space to increase spending without jeopardizing debt sustainability as long as they remain committed to fiscal reforms to increase the primary balance. The evidence supports the notion that the region’s public finances have improved in response to recent fiscal adjustments. However, national experiences differ considerably, especially given variation in the fiscal breakeven prices against the new normal of low oil prices. Moreover, the findings reveal that various measures of economic performance, as captured by economic growth, openness and the oil price, were also found to be important factors in explaining fiscal performance. The combined effects of low oil prices and high degree of openness warrant further efforts to reform the budget to increase the primary balance while safeguarding priority spending tomobilize non-energy growth and ensure debt sustainability in GCC.Originality/valueGiven recent experiences and the “low for long” oil price, policy priorities and reforms are necessary in oil-dependent economies, including GCC, to ensure macroeconomic sustainability. Sustaining the momentum of non-energy growth would reduce continued dependency of GCC economies on oil revenues and fiscal spending in the medium-term, creating a bigger scope for private sector participation in economic activity and increasing the prospects of further diversification away from long dependency on oil price volatility and their adverse implications on the fiscal budget and economic cycles.

Statistical Analysis of Impact of Non-Oil Tax Revenue on the Nigeria Economy

The objective of this paper is to explore the impact of Non-oil tax revenue on the economic growth of Nigeria as proxies by the real gross domestic product (RGDP). The ordinary least square (OLS) regression analysis was adopted to explore the relationship between the RGDP (the dependent variable) and (the independent variables), company income tax, (CIT), Custom and Excise Duty, CED, Value added Tax,(VAT), Federal government independent revenue, (FGIR), and Education taxes (ET), heads over the period 1995-2015. Augmented Dickey Fuller unit root test was employed to examine the stationary properties of the series, Johansen co-integration test was applied to determine the long-run relationship among study variables while fully modified ordinary least squares co-integrating regression equation was estimated to determine the impacts of Non –oil tax revenue on RGDP. Granger causality test base on Toda and yamamoto procedure was then applied to determine the direction on causality. The ADF unit root tests indicate that all the variable is integrated of order one, 1(1). The Johansen co-integration test reveals that the variable under are co-integrated and do not wander away from each other A simple hypothesis was formulated in the null form which states that there is no significant relationship between federally collected Non-oil tax revenue and the RGDP in Nigeria. The regression result indicated a very positive and significant relationship. However some of the indicator did not have much significant RGDP as they fell below the level expected. The anomaly was attributed to dysfunctional ties in the income tax system, loopholes in tax laws and inefficient tax administration. Suggestions were made as to strategies to be adopted to improve the system of tax administration and tax policy in other to increase Non-oil tax revenue generation. DOI : 10.7176/JESD/10-6-08 Publication date :March 31 st 2019

The Nexus between Oil and Non-Oil Revenue on Economic Development in Nigeria

Revenue generated from oil and non-oil product serves as the main channel trough which the government generate income to service its public goods. The objective of this study is to investigate the role oil and non-oil revenue play in development process in Nigeria. in the stusy economic development was proxied as human development index which served as the dependent variable while oil and non-oil revenue was used as independent variable. The data for the study was gotten from central bank of Nigeria bulletin and index mudi for the period 1981 to 2018. The study made use of Descriptive Statistics, Augmented Dickey-Fuller Unit Root test, Johansen Cointegration and Error Correction Estimates. The error correction estimates result showed that oil revenue has a negative but significant relationship with human development index, the negative contribution arose as a result of the resource curse ideology while non-oil revenue has a positive but insignificant relationship with human development index. Thus, diversification of exportable product is required. There is need to boost security surveillance on the high sea so as to reduce smuggling which will reduce illegal export of crude oil.

Tax Identification Number and Non-Oiuta Revenue: A Comparative Analysis of Pre and Post Tin Advanced Taxation Management (ACC 921)

Non-oil tax revenue constitutes an integral part of the total revenue of Nigeria. It is expected that the introduction of the Taxpayer Identification Number (TIN) will have a significant effect on total non oil tax revenue since more companies would be captured by the tax net. This paper therefore set out to empirically investigate the effect of TIN on non oil tax revenue through a comparative analysis of pre and post TIN years of 2000 to 2015. Data was collected from Central Bank of Nigeria (CBN) Statistical Bulletin. The study employed both descriptive and pairwise t-test statistical techniques for analyses with total non-oil tax revenue as the dependent variable while CIT, VAT and TET were the independent variables. Findings showed that there has been a significant increase in total non-oil tax revenue with the introduction of TIN. Also, revenue generated from CIT and TET after the implementation of TIN improved significantly. VAT revenue however, did not improve after the implementation of TIN. Recommendations include that the VAT base needs to be enlarged through electronic capture of all VATable persons.

Gabon

While external buffers are being rebuilt, the CEMAC’s recovery remains fragile. In Gabon, macroeconomic conditions are slowly improving. Activity is stabilizing, with 2017 growth revised to 0.5 percent—a slowdown broadly in line with trends envisaged at the time of the program request a year ago. Oil and mining exports helped narrow the 2017 current account deficit. The overall fiscal deficit (cash basis) declined by 3¼ percent of GDP, but the adjustment relied on large cuts in public investment. Weak program implementation contributed to the underperformance of non-oil revenues and overruns on current spending. Fiscal slippages aggravated already significant cashflow pressures, contributing to the authorities’ failure to clear all external arrears at end 2017. The authorities recently announced a strong package of fiscal consolidation measures.

Dynamic relationships among non-oil revenue, government spending and economic growth in an oil producing country: Evidence from Nigeria

This paper investigated the dynamic relationships among non-oil revenue, government spending and economic growth in Nigeria for the period of 1981 to 2015. After establishing a long run relationship among the variables, the error correction model, impulse responses were estimated as well as the granger causality test among the variables. The results of the short run and long run showed negative effects of government spending on economic growth while non-oil revenue showed positive effect on economic growth. We also found non-oil revenue to have negative shocks on economic growth while the government spending shock was positive. The Granger causality revealed that government spending granger caused both non-oil revenue and economic growth supporting the Keynesian and spend-tax hypothesis in Nigeria over the period of the study. We recommend that the economy of Nigeria should be diversified into non-oil sector rather than relying solely on revenue from oil export.

Do Government Revenues Matter for Economic Growth? Evidence from Nigeria

The bursting of crude oil prices in the international market since mid-2014 has resulted in dwindling oil revenue, which has led to economic recession in Nigeria. The recession has further exacerbated existing socioeconomic problems bedeviling the country. In the light of this, we examined the effect of government revenues (oil and non-oil revenues) on economic growth, both in the short-run and the long-run using autoregressive distributed lag method. Our findings show that government revenues are indispensable to economic growth in Nigeria. In addition, we found that economic growth is more responsive to oil revenue than non-oil revenue. Based on our findings, we advocate for effective and efficient use of government revenues. Furthermore, since oil revenue fluctuates more than non-oil revenue, we further advocate for creation of an enabling business environment geared towards improving the contribution of the non-oil sector to the government revenue base.

Economic Analysis of Capital Expenditure and Infrastructural Development in Nigeria

Infrastructural development has been the major concern of countries all over the world due to its significant impact in fostering growth. In Nigeria, it has been observed that the level of infrastructure posed serious threat to attaining sustained growth. This study therefore examines the impact of capital expenditure on infrastructural development in Nigeria, utilising time series from 1970 to 2017. The study adopted autoregressive distributed lag (ARDL) model due to the possibility of the past value of the dependent variable explaining its present value, and found that capital expenditure, construction expenditure and non-oil revenue have the potency of accentuating infrastructural development in the long-run but such is being hampered by external debt. The positive effect of recurrent expenditure on infrastructural development is a pointer that bulk of the expenditure in Nigeria over the years is recurrent in nature. These suggest the need to boost non-oil revenue, reduce recurrent and channel external debt into productive infrastructural development.

Evolution, Strategies and Problems of Poverty-Alleviating Agricultural Policies and Programmes in Nigeria

According to the UNDP (2001) report, Nigeria started its independent nationhood in 1960 with poverty level of only 15% of population, but it is today struggling to reduce it from about 70% of its current population of about 190 million. This is in spite of the fact that the country is richly endowed with numerous natural, especially agricultural and mineral resources. Nigeria’s rising extreme poverty numbers are a direct result of years of negligent and ineffective government policies. Over-dependence on oil for years and an inability to generate non-oil revenue has led it to this. The country’s agricultural policy aims at reaching self-sustaining growth in the agricultural sector as well as the structural transformation required for the overall socio-economic development and improvement in the quality of life of Nigerians. The key feature of the policy is the evolution of strategies for ensuring self-sufficiency and the improvement of the technical and economic efficiency in food production. This is to be achieved through the introduction and adoption of improved seeds and seed stock, husbandry and appropriate machinery and equipment, efficient utilization of resources, encouragement of ecological specialization and recognition of the roles and potentials of small-scale farmers as the main drivers of food production in the country. Nigeria’s agricultural policy framework has evolved in a way that reflected, in a historical perspective, the changing character of agricultural development problems and the roles which different segments of the society were expected to play in addressing these problems. The form and direction of agricultural policy were dictated by the philosophical stance of government on the content of agricultural development and the role of government in the development process. Here, we examined Nigeria’s agricultural policy evolution from the colonial to the contemporary period. The very survival of Nigeria is tied to the ability of its economy to meet the material demands of its citizens since welfare constitutes a third objective of modern government. Food is an essential component of welfarism. The Nigerian Government and public policy makers must therefore see food as a component of welfarism and as such develop and sustain sufficient political will to achieve increased food production, a credible food policy and ultimately degrade poverty significantly.

Gulf Cooperation Council

Global economic activity is gaining momentum. Global growth is forecast at 3.6 percent this year, and 3.7 percent in 2018, compared to 3.2 percent in 2016. Risks around this forecast are broadly balanced in the near term, but are skewed to the downside over the medium term. The more positive global growth environment should support somewhat stronger oil demand. With inflation in advanced countries remaining subdued, monetary policy is expected to remain accommodative. GCC countries are continuing to adjust to lower oil prices. Substantial fiscal consolidation has taken place in most countries, mainly focused on expenditure reduction. This is necessary, but it has weakened non-oil growth. With the pace of fiscal consolidation set to slow, non-oil growth is expected to increase to 2.6 percent this year, from 1.8 percent last year. However, because of lower oil output, overall real GDP growth is projected to slow to 0.5 percent in 2017 from 2.2 percent in 2016. Growth prospects in the medium-term remain subdued amid relatively low oil prices and geopolitical risks. Policymakers have made a strong start in adjusting fiscal policy. While the needed pace of fiscal adjustment varies across countries depending on the fiscal space available, in general countries should continue to focus on recurrent expenditure rationalization, further energy price reforms, increased non-oil revenues, and improved efficiency of capital spending. Fiscal consolidation should be accompanied by a further improvement in fiscal frameworks and institutions. The direction of fiscal policy in the GCC is broadly consistent with these recommendations. Policies should continue to be geared toward managing evolving liquidity situations in the banking system and supporting the private sector’s access to funding. While countries have made progress in enhancing their financial policy frameworks, strengthening liquidity forecasting and developing liquidity management instruments will help banks adjust to a tighter liquidity environment. Banks generally remain profitable, well capitalized, and liquid, but with growth expected to remain relatively weak, the monitoring of financial sector vulnerabilities should continue to be enhanced. Diversification and private sector development will be needed to offset lower government spending and ensure stronger, sustainable, and inclusive growth. This will require stepped-up reforms to improve the business climate and reduce the role of the public sector in the economy through privatization and PPPs. Reforms are needed to increase the incentives for nationals to work in the private sector and for private sector firms to hire them. Increasing female participation in the labor market and employment would benefit productivity and growth across the region. Where fiscal space is available, fiscal policy can be used to support the structural reforms needed to boost private sector growth and employment.

Chad

This paper discusses Chad’s Request for a Three-Year Arrangement under the Extended Credit Facility (ECF) and Cancellation of the Current Arrangement. The main elements of the program are the reestablishment of debt sustainability through external debt restructuring, achieving gradual fiscal adjustment by maintaining a tight spending envelope, better mobilizing non-oil revenue, and creating space for domestic arrears clearance. The aim is to stabilize the fiscal position and help achieve a durable economic recovery while supporting regional stabilization efforts. Strengthening public financial management and diversifying the economy are expected to support the efforts to strengthen the fiscal position and boost the non-oil sector. The IMF staff supports the authorities’ request for a new ECF arrangement.

La simple aritmética de la nueva política de precios de las gasolinas y el diesel

The composition and magnitude of the price increase for gasoline and diesel, initiated on January 1, 2017, the largest single movement in real terms of the Twenty-First Century, applied in a differentiated manner depending on the logistic conditions of the 90 regions in which the country was divided, is analyzed. The movement preluded the liberalization of fuel prices, starting in February 2017. The high share of indirect taxes in the new price levels is highlighted, along with the arguments used by the federal government to fix them, with evident technical and social communication shortcomings. The main hypothesis of the work is that the price adjustments served to pave the way for national and international private oil companies to start importing fuels, as envisaged in the energy reform, while the federal government obtains more tax resources to mitigate the deterioration of public finances. This later was originated by the reduction of crude oil exports prices, the lower production of hydrocarbons and the large service of the public debt, without evidencing the benefits of the increase of two and a half percentage points in relation to the gdp of non-oil tax revenues, due to the 2013 fiscal reform.

The Execution of the Federal Budget for 2016

The RF federal budget for 2016 was executed with a deficit of 3.4% of GDP. This figure is significantly higher that the corresponding index for 2015 (2.4% of GDP), but still lower than the projection in the most recent version of the Law on the Federal Budget for 2016 (3.7% of GDP). The plunge of total federal budget revenue did not exceed 0.7 p.p. of GDP (as compared with 2015) due to the increased non-oil and gas revenue component. The year-end expenditure for 2016 jumped by 0.3 p.p. of GDP, due in the main to the additional allocation, in November, of Rb 739.7bn to national defense.

INGRESO PÚBLICO EN MÉXICO: UN ANÁLISIS ENTRE INGRESOS PETROLEROS Y CARGA FISCAL, 2006-2012

Este trabajo analiza la dependencia de los ingresos petroleros en el gobierno de Felipe Calderón Hinojosa (2006-2012), así como la composición de los rubros que integran los ingresos públicos federales, principalmente la relación entre los ingresos petroleros y los ingresos no petroleros. Se compara la carga fiscal de México con otros países latinoamericanos y la importancia que tienen los gobiernos estatales y municipales en la recaudación fiscal.

Oil Dependency of GCC Stock Markets: Co-integration of GCC Stock Market Indices and Oil Price

Oil dependent economies of GCC countries had passed through various cycles of boom and trough of oil price. In the aftermath of the economic recession of 2008 and oil price, the GCC countries have been pursuing plans for diversifying to non-oil revenues. The oil of 2014-16 raised the issue of stock market cointegration to oil price movement in the background of non-oil diversification.This research study analyzes long term cointegration of oil price and GCC stock indices, and also cointegration among the GCC stock indices per se in an attempt to investigate if there is any early sign of disintegration of GCC stock markets from oil price cyclicality. The study period is linked to cyclicality of oil price: the first period comprising of Jan 2006- Dec. 2011 that covers oil price cycle during economic recession of 2008, and the second period comprising of Jan 2012 –September 2016 which covers the post-economic recession oil price cycle. The null hypotheses is that oil price and stock market indices are co-integrated.Based on Johansen Cointegration test on Box Cox transformed data of oil price and seven stock market indices of GCC countries, it is found that oil price and GCC stock markets are co-integrated. Analysis using Augmented Dickey- Fuller test and Phillips –Perron test shows that data series are all I (1). This study establishes that efforts to reduce oil dependency in GCC countries is yet to result in decoupling of financial markets from oil price cyclicality. This study also establishes that GCC stock markets per se are co-integrated but factors of cointegration beyond oil price are not explored.