Tax revenue to GDP drops by 10% after rebasing
Tax revenue to Gross Domestic Product (GDP) has plummeted from 22 to 12 per cent following the rebasing exercise that saw the Nigerian economy taking the lead as the largest in Africa.
Speaking at the commissioning of the Federal Inland Revenue Services (FIRS) training centre in Durumi District of Abuja yesterday, Coordinating Minister of the Economy and Minister of Finance, Dr Ngozi Okonjo-Iweala, said although it was heartwarming that the GDP rebasing had revealed the true worth of the economy, but the revenue to GDP ratio had taken a dip after it was recalculated including other variables.
The minister urged the staff to work hard to move up to 20 per cent before the next rebasing.
Last Sunday, the minister alongside the Statistician General of the Federation, Dr. Yemi Kale, released new figures showing that Nigeria had overtaken South Africa as the largest economy of the Africa continent and shot to 26th position in global ranking.
Following the rebasing exercise, the country’s real GDP for 2011 and 2012 now stood at 5.09 per cent and 6.66 per cent, while the economy grew by 7.41 per cent in real terms last year.
South Africa’s GDP for 2013 was $370.3 billion (N60.7tn). The new one for Nigeria is $510 billion 24 years after the last one was done.
Okonjo-Iweala charged the FIRS staff to redouble their effort to return to 20 percent of revenue to GDP ratio.
She said: “The FIRS has been trying but like Oliver Twist, I will urge you to do more. It is my hope that this training centre will be used judiciously to improve the capacity of your staff towards improving the country’s non-oil revenue base.”
The minister further said even though debt to GDP ratio had come down from 19 percent to 11, the federal government was not planning to embark on borrowing just yet.
Earlier, the acting Executive Chairman of the FIRS, Kabiru Mashi, said the training school which was initially meant to serve as staff quarters was converted following federal government’s monetisation policy.