Financial Accounting, SS 2, Week 4
Topic: Sources of government revenue
Content
- Levels of Government
- Sources of revenue
The 3 levels of government are
- Federal
- State
- Local
The sources of revenue will be analyzed on the basis of level of government
Federal government
The federal government has the responsibility of preparing the financial statement of account which must show the true and fair view to the nation at a particular point in time
- Direct taxes; the direct taxes include: personal income tax, company income tax, petroleum tax, capital gain tax
- Indirect taxes; import duties, excise duties, tariffs, export duties
- Mining; royalties on mineral resources, revenue from oil sales, mining fees
- Fees;court fees, passport fees, visa fees, advertisement fee
- Earning and sales; federal government investment, sales of government properties etc.
- License and internal revenue; registration and license fee, arms and ammunition license fees
- Interest and repayment;interest and repayment of loans granted to state government and government workers
- Rent on government properties;rent of government offices, federal government land fee, rent on government vehicles
- Armed forces; sales of small weapons, sales of armoured tanks etc
- Miscellaneous;all other income not mentioned
State government: This is the second tier of government, the states empowered to generate their revenue apart from the federal government statutory allocation
Sources of revenue
- Statutory allocation; this is the grant from the federal government to the state government
- Income tax;
- Fees
- License of car,motor cycle etc.
- Interest and repayment of loans and granted to workers
- State government investment
- Rent on government properties
Local government: This is the third tier of government in Nigeria. Local government authorities can also generate revenue apart from the statutory allocation.
Sources of revenue
- Statutory allocation from federal government
- Special grants
- Donations
- Tenement rates
- Fines
- Renewal of licences
- Park collection
- Interest on investment
Consolidated revenue fund: This fund was established by the constitution of the federal republic of Nigeria. All the revenue received by the government are paid into this fund,with the exception of revenue specifically set aside for other funds. The charges to find the fund are all in the heads of recurrent expenditure;salary and allowances of statutory officers e.g accountant general
Federation fund: This fund was established by the civil services and local government decree of 1988. The income accruing to this account are direct taxes.indirect taxes and mining. The proceeds of income into the account are distributable in accordance with revenue allocation formula
Development fund
This fund was established by the constitution. The purpose is for capital development projects.the sources of income are:transfer from consolidated revenue fund,external grants,internal grants. The expenditure are(1) sundry capital expenditure like roads,airport,electricity etc.(2) general administration and (3)external financial obligations
Contingencies fund
This fund was also established by the constitution to take care of urgent and unforeseen expenses. It takes care of any national disaster. The sources of revenue is the transfer from from consolidated revenue fund. Money will be expended from the contingencies in exceptional cases where virement is not possible,where the call for additional provision for funds reveal such a high degree of urgency that the fund cannot be delayed without causing serious injury to public interest.the contingency fund warrant will be released transferring the amount required.
Test and Exercise
- Give five sources of revenue to the federal government
- Identify the levels of government
- Explain the following
- Contingencies fund
- Consolidated revenue fund
- Development fund
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3 thoughts on “Classwork Series and Exercises {Financial Account – SS2}: Sources of Government Revenue”
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