Nigerian 2015 Budget Replaces Lost Oil Revenues

19 December 2014

The fall in global oil prices, and consequent fall in its revenue, has forced the Nigerian Government to reinforce its 2015 Budget proposals with non-oil tax increases.

The Government expects low oil prices to persist. This has led to a reduction in the expected economic growth rate in 2015 (to 5.5 percent from 6.35 percent), while the Government has had to set the benchmark oil price in next year's Budget at USD65 per barrel, down from USD78.

On that basis, with oil revenues providing around 70 percent of its revenues, the Government will only have been able to fund a marginally-reduced NGN4.3 trillion (USD22.9bn) 2015 Budget, and produce an expected fiscal deficit of only 0.79 percent of GDP, by raising non-oil revenue through new tax measures and improved tax administration.

To raise total revenues to NGN3.6 trillion next year, the Minister of Finance, Ngozi Okonjo-Iweala, has confirmed that, while also committing to a reduction in tax breaks so as to broaden the country's tax base, import duty surcharges are proposed to be introduced on luxury goods.

For example, it was indicated that 10 percent and 39 percent surcharges could be imposed on new private jets and luxury yachts respectively, while a further 5 percent surcharge is proposed to be introduced on luxury cars. In addition, there could be surcharges on champagnes, wines and spirits, and on business and first class air tickets.

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