- FIRS set for sole responsibility of revenue collection
The Presidential Committee on Tax Policy and Fiscal Reforms has advised the Federal Government to stop the Nigeria Customs Service (NCS), Nigerian Ports Authority, Nigerian Maritime Administration and Safety Agency (NIMASA), and 60 other Ministries, Department and Agencies from collecting revenue on behalf of the Federal Government.
Going by the new plan, trillions of revenue generated or collected by the agencies will now be collected by the Federal Inland Revenue Service (FIRS).
News Diet recalls that the Asiwaju Maritime Network (AMN) had advised the presidency to opt for this strategy rather than merging agencies with distinct functions on the basis on revenue generation.
The Chairman of the committee, Taiwo Oyedele, revealed this plan when he spoke on Channels Television’s Sunrise Daily breakfast programme on yesterday, stressing that FIRS is best suited to collect revenue for the MDAs.
According to Oyedele, who is a former Fiscal Policy Partner and Africa Tax Leader at PriceWaterhouseCoopers, Nigeria’s revenue collection from taxes is one of the lowest in the world but the cost of collection is high.
“Ironically, our cost of collection is one of the highest. And the reason for that is that we’ve got all manners of agencies. The Federal Government alone, we have 63 MDAs that were given revenue targets last year, no; actually in the 2023 budget,” he said.
“Two things that would come up from that: on one hand, these agencies are being distracted from doing their primary function which is to facilitate the economy. Number two, they were not set up to collect revenue, so, they won’t be able to collect revenue efficiently.”
“So, move those revenue-collection functions to the FIRS. It has two advantages: the cost of collection and efficiency will improve, these guys will focus on their work, and the economy will benefit as a result.”
Asked for clarity on his comments, Oyedele said, “If you are Customs, focus on trade facilitation, border protection and if you are NCC (Nigerian Communications Commission), just regulate telecommunications. You are not set up to collect revenue.
“It can be your revenue and someone else can collect it for you. There will be more transparency because you can see what is being collected and is accounted for properly. It is also a way of holding ourselves to account as to how we spend the money we collect from the people.”
The committee chair said there would be a pushback from stakeholders and others benefitting from the process but the committee’s sole objective is to not to take what belongs to anyone but what should come to the government.
Oyedele also described the Treasury Single Account initiative as a step in the right direction but it has not been fully developed. He said the TSA would help his committee’s work but there are more to do to maximise the initiative.
Some of the agencies that would be affected include the Federal Airports Authority of Nigeria, Nigerian Ports Authority, Nigeria Deposit Insurance Corporation, Nigerian Meteorological Agency, National Agency for Food and Drug Administration and Control, Federal Road Safety Corps, Nigeria Customs Service, Standards Organisation of Nigeria and the Nigerian Airspace Management Agency
Others are Bank of Agriculture, Nigerian Bulk Electricity Trading, Tertiary Education Trust Fund, Federal Radio Corporation of Nigeria, Nigerian Railway Corporation, Federal Reporting Council of Nigeria, Corporate Affairs Commission, Nigeria Civil Aviation Authority, National Broadcasting Commission, Joint Admission Matriculation Board.
The National Automotive Design and Development Council, Federal Mortgage Bank of Nigeria, Nigerian Upstream Petroleum Regulatory Commission, and the Nigerian Communications Commission will be affected too.
Findings by the News Diet showed that about 11 of these agencies generated over N4.13tn last year.
Majority of the revenue was generated by the Nigeria Customs Service. The agency generated about N2.6tn in 2022, which was, however, below its N4.1tn target for the year.
The PUNCH also observes that the affected agencies may lose their cost of collection.
In 2022, the Nigerian Customs Service withdrew N128.64bn (five percent of its generated revenue) as cost of collection.
Another affected agency is the Nigerian Upstream Petroleum Regulatory Commission, formerly Department of Petroleum Resources, which received 2.6 per cent of the total revenue collected (N462.81bn), as the cost of collection during the period.
Speaking on this development, the Director-General of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, Olusola Obadimu said the idea of taking away revenue collection from Customs or the other MDAs would contradicts the existing targets already set for them to accomplish.
Meanwhile, he opined that the suggestion could become feasible in the long run when a more detailed presentation of its workability has been made.
His words: “If you want to take revenue-collecting responsibility from Customs, why did you budget target for them for the year? I think it is just a suggestion. Some things cannot take place immediately. It’s not something that can take effect immediately.”
Obadimu, however, expressed doubt over the government’s willpower to implement the recommendations of the panel.
He recalled that despite several calls for the implementation of the Oronsanye report which was meant to cut down the cost of governance, the government is yet to implement the recommendations of the report.
On his part, the Deputy-President of the Lagos Chamber of Commerce and Industry, Gabriel Idahosa described the idea as dangerous because it could prompt the affected agencies of government to work against the initiative.
He said, “If you stop Customs from collecting taxes, Customs may deliberately sabotage imports and exports, all the other agencies may deliberately sabotage the system if you take away their ability to collect revenue.”
Idahosa added that the idea would have to be thoroughly analysed to determine its feasibility.
According to him, having the FIRS hold exclusive right to revenue collection is almost impossible since the relevant agencies will still be involved in the process, because they understand the respective industries better.
