TECHNIQUES OF REVENUE ESTIMATION

TECHNIQUES OF REVENUE ESTIMATION

According to research and technical committee (2004), The first step in revenue estimation is to determine the revenues generating items and actual revenue from the cash source in recent years.

Revenue is forecasted for each source using relevant variables. For instance, personal income taxation is based on aggregate disposable income and their factor distributing oil revenues uses. The projected production and practices, export duties are based on ratable properties and their rates.

Sometimes reliable data for their forecast are not available and the estimation is based on arbitrary figure.

The accounting officer in each ministry and extra ministerial department is responsible for estimating the revenues items under his control. The budget ministry coordinate the remaining revenues items contained in the budget. That ministry also projects the total revenue.

Various techniques are employed to estimate the revenues budget. They include:

• Use of arbitrary figure
• Method of average
• Direct valuation and regression models

PROGRESSIVE TAX:

This involves the graduation of rates on each unit of income in such a manner that each additional range of income attracts a higher tax per unit (say per Naira) than the lower unit.

These is basic income the tax payer requires to maintain a minimum standard of living which is not taxable. The more he earns the more sacrifice he can afford to make by the payment of amenities to the less affluent members of the society.

The more importance of revenue to the government cannot be overemphasized. This can be appreciated , it is understood that revenue in this context simply means the government’s annual income from which public expenses are met if there is no revenue. There will be no expenditure which also means to payment of salaries and no development.

The need for government to raise revenue and make every taxable citizen loyal to the government and discharge his public duties by paying the tax at the right time and so contribute their share of money required by the government such as which is expected to come back in form social amenities.