- 30 Marks
Question
The Office of the Accountant-General of the Federal Republic of Mazobia presented the following financial data (estimates) concerning the budget for 2017:
- Federation Account Budget: N66,955,000,000
- Total Value Added Tax Collections: N36,690,000,000
- Federal Independent Revenue: N6,380,000,000
- Total Expenditure by the Republic: N52,715,000,000
The revenue accruable to the Federal Republic of Mazobia is based on the following revenue-sharing formula among the three tiers of government:
- Federal Government: 56%
- State Governments: 24%
- Local Governments: 20%
- Total: 100%
The total expenditure of the Federal Republic of Mazobia is distributable as follows:
- Statutory Transfers: 8%
- Debt Services: 12%
- Other Service-Wide Votes: 6%
- Capital Expenditure: 32%
- Personnel Cost: 34%
- Consolidated Revenue Fund (CRF) Pensions: 3%
- Subventions to Parastatals: 5%
- Total: 100%
Share of Value Added Tax collections are as follows:
- Federal Republic (as collection costs): 15%
- State Governments (based on derivation): 50%
- Local Governments (based on derivation): 35%
- Total: 100%
Federal Republic of Mazobia (FRM) shares its own portion of the Federation Account (56%) as follows:
- FRM CRF available for FRM budget: 48.5%
- Federal Capital Territory: 1.0%
- Share of Derivation & Ecology: 1.0%
- Statutory Stabilisation: 1.5%
- Derivation of Natural Resources: 4.0%
- Total: 56.0%
Based on the available data, you are required to:
a. Calculate the revenue estimates accruable to the Federal Republic of Mazobia from:
i. Federation Account (2 Marks)
ii. From Value Added Tax (2 Marks)
iii. Total revenue accruable to the Federal Republic of Mazobia (3 Marks)
b. Calculate the share of Federation Account allocation to the Federal Government among the various beneficiaries (16 Marks)
c. How much of the Federal Government of Mazobia budget will be by deficit financing? (2 Marks)
d. Enumerate any FIVE exclusive Internally Generated Revenue payable into the Consolidated Revenue Fund (5 Marks)
(Total 30 Marks)
Answer
a. Calculation of the revenue estimates accruable to the Federal Republic of Mazobia:
i. Federation Account
Revenue from the Federation Account for the Federal Republic of Mazobia is 56% of N66,955,000,000:
= 56% × N66,955,000,000
= N37,494,800,000
ii. Value Added Tax (VAT)
Revenue from VAT collections for the Federal Republic of Mazobia is 15% of N36,690,000,000:
= 15% × N36,690,000,000
= N5,503,500,000
iii. Total Revenue Accruable to the Federal Republic of Mazobia
= Revenue from Federation Account + Revenue from VAT + Federal Independent Revenue
= N37,494,800,000 + N5,503,500,000 + N6,380,000,000
= N49,378,300,000
b. Calculation of the share of Federation Account Allocation to the Federal Government among the various beneficiaries:
FRM Share of Federation Account (56%):
N37,494,800,000
Share Allocation Breakdown:
- Consolidated Revenue Fund (CRF) available for FRM Budget:
48.5% × N66,955,000,000 = N32,473,175,000 - Federal Capital Territory (FCT):
1.0% × N66,955,000,000 = N669,550,000 - Derivation & Ecology:
1.0% × N66,955,000,000 = N669,550,000 - Statutory Stabilisation:
1.5% × N66,955,000,000 = N1,004,325,000 - Derivation of Natural Resources:
4.0% × N66,955,000,000 = N2,678,200,000
Total Share Allocated:
= N32,473,175,000 + N669,550,000 + N669,550,000 + N1,004,325,000 + N2,678,200,000
= N37,494,800,000
c. Deficit Financing:
Total Revenue Accruable: N49,378,300,000
Total Expenditure: N52,715,000,000
Deficit Financing:
= Total Expenditure – Total Revenue
= N52,715,000,000 – N49,378,300,000
= N3,336,700,000
d. Five Exclusive Internally Generated Revenue (IGR) Sources Payable into the Consolidated Revenue Fund (CRF):
- Customs Duties
- Excise Duties
- Income Tax
- Fees and Charges
- Operating Surplus from Government Enterprises
- Tags: Consolidated Revenue Fund, Deficit Financing, Federation Account, Revenue Estimates, VAT
- Level: Level 2
- Topic: Government Revenue
- Series: NOV 2016
- Uploader: Kwame Aikins