- Pix above(L-R): PBAT and Mr. Taiwo Oyedele, Chairman, Presidential Committee on Tax Policy and Fiscal Reforms
The Federal Government of President Bola Ahmed Tinubu has put functional mechanisms in place to strip Nigerian Customs and 62 MDAs the right for revenue collection and handed over all revenue collections to the Federal Inland Revenue Service (FIRS) as a single entity for revenue collection.
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Disclosing this while speaking on Channels Television’s Sunrise Daily breakfast programme on Wednesday, August 9, 2023, Taiwo Oyedele, Chairman of the Presidential Committee on Tax Policy and Fiscal Reforms, said it is alarming that Nigeria’s revenue collection from taxes is one of the lowest in the world but the cost of collection is high.
Oyedele, a former Fiscal Policy Partner and Africa Tax Leader at PriceWaterhouseCoopers (PwC), said: “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, has 63 MDAs that were given revenue targets last year, no; actually in the 2023 budget.”
“And 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 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 Presidential Committee on Tax Policy and Fiscal Reforms chairman said there will be pushback from stakeholders and others benefitting from the process but the committee’s sole objective is not to take what belongs to anyone but what should come to the government.
Oyedele also described the Treasury Single Account (TSA) initiative as a step in the right direction but it has not been fully developed. He said the TSA will help his committee’s work but there is more to do to maximise the initiative.
Furthermore, Oyedele said the presidential committee would look into excess bank charges. He said businesses pay as high as 65 to 70 levies and taxes but the committee’s plan is to reduce the number of taxes to about 10.
Oyedele, chairman of the committee inaugurated by President Bola Tinubu on Tuesday, said Nigeria’s tax gap is estimated at around N20trn as many members of the elite evade paying the exact taxes they should remit to the government.
“As of today, we have a significant tax gap estimated in the region of 20 trillion or even more naira. If you focus more on the few major taxes – Value Added Tax, Corporate Income Tax, Personal Income Tax, a lot of people are not (tax) compliant, particularly the middle class and the elite, some of them are in the tax net with one or two fingers, you pay a thousand naira as tax when you should have paid N10m,” he said.
The tax expert said all of the revenue not captured before would be brought into the tax net if harmonized and into the step of a single entity, such as FIRS.
Also speaking at the 153rd Meeting of the Joint Tax Board which held, Monday, in Abuja with the theme: “Harmonization and codification of taxes at the National and Sub-national levels: Key to achieving a tax friendly environment in Nigeria, Oyedele said: ” the country’s revenue challenges is not to introduce more taxes, but to focus on the few taxes that are high yielding,” noting that with these, tax authorities would be able to collect far more than is currently being collected.(agency)/SHARE THIS
