2015 budget: FG maintains 65 dollars oil price, introduces charges on luxury goods

Okonjo Iweala presenting the budget

Minister of Finance, Dr Ngozi Okonjo Iweala, said Federal Government would continue with the proposed 65 dollars oil benchmark for the 2015 budget in spite of volatility in the global oil price.

Okonjo-Iweala disclosed this at the public presentation of the 2015 budget on Wednesday in Abuja.

``We have put the following benchmarks, which are operated in the 2015 budget; oil production remains at 2.27 million barrel per day, as I said, benchmark oil price at 65 dollars per barrel.

``We are using an exchange rate of N165 to the dollar and we are projecting a fiscal deficit N755 billion or 0.79 per cent of Gross Domestic product (GDP).

``And we are keeping domestic borrowing at a downward trend, the same as last year at about N570 billion which is comparable to the N572 billion for 2014,’’ she said.

According to her, GDP growth is projected at 5.5 per cent as also projected by the National Bureau of Statistics.

This, she said, was one percentage point lower than what had projected with the earlier 78 dollars oil benchmark.

``We had projected 6.355 per cent but we are now at about 5.5 per cent, somewhat lower,’’ she said.

The minister noted that the 65-dollar oil benchmark represented a 13-dollar per barrel drop from what was originally proposed before the drop in oil price.

She added that government had decided to take short to long term measures to tackle the basic challenges in the economy.

She said that most of the measures would kick in towards the second quarters of 2015, adding that it would help to boost the non oil revenue in the country.

`` Over the past few years, government has been working very hard to improve Independently Generated Revenue (IGR) and has sustained an upward trajectory receipts.

``Actual receipt had actually grown from about N182 billion in 2011 to N274 billion in 2013 and N328 billion as at October 2014.

``While this is encouraging, there is still leakages and incidence of non remittance to the treasury,'‘she said.

She said that for the 2015 budget, IGR had been projected at about 450 billion up from 328 billion as at October.

She said that in the short term, the tax revenue would be increased but added that it would not be by increasing the tax rate but by strengthening tax administration.

On other ways to generate revenue, she said the Federal Inland Revenue services would be improved to bring in N160 billion in 2015 and over the three years period, an additional N460 billion.

``We have done work on waivers and exemptions and the analysis done showed that about 30 per cent of those who receive waivers at the pioneer status are using the system.

``when we plug the gap as we intend to do, it will yield additional N36 billion as additional revenue in 2015.

``Government is going to implement a sole charge on luxury goods; a 10 per cent import sole charge will be imposed on new private jets which are being brought into the country.

``And with the estimate we have, we will be expecting about N3.7 billion in 2015, a 39 per cent import sole charge on luxury yachts which is expected to raise about N1.6 billion.

``A five per cent import sole charge on luxury cars estimated to yield about N2.6 billion; all of these are expected to kickstart later in 2015,’’ she said.

Okonjo Iweala said that a sole charge was also proposed on business and first class flight tickets and non on the economy tickets, adding that Champagnes, wines and spirits would also be charged.

This, she said, would generate N2.3 billion, adding that a mansion tax had also been proposed to be collected in the FCT.

She said that residential properties with values above 300 million would pay tax and projected to yield about 350 million for the FCT and would help to enhance the revenue.

``In total, all the sole charges on the luxury items are expected to yield about 10.5 billion in 2015 ,’’ she said.