Immediately the Minister of Communication and Digital Economy Dr Isah Ali Pantami’s statement that the Nigerian Postal Service (NIPOST) should be allowed to collect stamp duty, just like the Customs collects duties, gained traction in Nigeria, Federal Inland Revenue Service (FIRS), which has been seeking to impose itself as the sole agency responsible for tax collection in Nigeria became jittery and desperate.
FIRS’s desperation, a function of its inordinate effort to become a rent seeking organisation in Nigeria, can easily be seen in the number of poorly scripted articles they apparently sponsored in the media, particularly the social media, against NIPOST. A situation whereby an agency of government collects 4% on the amount accruable to government in a year from stamp duty, as expenses it incurred in the course of collecting such, without dissipating energy whatsoever, amounts to rent seeking.
This implies FIRS desperately wants to be collecting 4% from government without work. In the light of this fact, one can clearly see where the desperation to monopolise stamp duty collection by the agency is coming from. The danger in this type of rent collection by government agency is that it promotes corruption.
Perhaps, another reason behind FIRS’s blind ambition to see at all cost that the right to collect stamp duty is ceded to it by government is the ease at which the duty can be collected now. It could be recalled that on January 15, 2016, the Central Bank of Nigeria (CBN) directed commercial banks to start deduction of N50 for any transaction above N1000, in accordance with the Stamp Duty Act of 2004.
This development made it easy to track and route stamp duty proceeds to the federation account. So, what FIRS intends to profit from this easy method is just that 4%, nothing more. It is doubtful FIRS would have bothered itself with stamp duty collection if they are to perform the task of affixing N50 stamp on transactional documents as required by law.
On February 19, 2020, Dr Adewusi-led NIPOST management team paid a visit to Nigerian Communication Commission (NCC) to explore areas of collaboration on digital financial services. The visit was widely publiciced by national dallies in Nigeria; however, one online newspaper, busnesshighlights.com.ng, probably commissioned by interest sympathetic to FIRS to attack Adewusi-led NIPOST management team, added mischief to its version of the report of the visit. The online opening paragraph said, “Following the recent loss of the battle to control the collection of Stamp Duty to the Federal Inland Revenue Service NIPOST has stepped up efforts to find relevance of existence”. Although, this writer should not have joined issues with this online newspaper, as other reputable dallies had reported accurately what transpired between NIPOST and NCC, but for Nigerians who deserve to know the real issues in contention as regard the stamp duty.
In the first place, FIRS now knows that Nigerians are aware Customs collects tax on behalf of federal government too. The court (judiciary) collects stamp duty fee on deeds. In perfecting deed of assignment, partnership, etc, the court collects fees, yet, FIRS says they are the only agency saddled with the responsibility of collecting tax in Nigeria. Isn’t it obvious that the argument of tax collection monopoly by FIRS has collapsed?
Secondly, even if the two chambers of National Assembly pass a law that allows FIRS collect stamp duty on behalf of federal government, President Muhammadu Buhari may not sign such bill into law because such arrangement is not economically viable based on the most important principles of taxation (the cost of collecting tax most not outweigh the benefit). Unless NASS was heavily compromised, it can never enact a law that takes away the right and custodian of stamp from NIPOST.
The question on the lips of Nigerians is, even if FIRS is given the go ahead to collect stamp duty, how will it go about it, will it buy stamps from NIPOST and then, administer it, according to the law? If this scenario should be the case, what happens to the principles of taxation? It is obvious that if FIRS is allowed to collect stamp duty, the revenue accruable to federal government from the sale of stamp will be wiped out because it will be far more costly.
Apart from FIRS insistence and desperation to collect 4% as the expenses for collecting stamp duty from structured sources, how will the agency collect stamp duty from unstructured sources? Will FIRS take over the custodian of stamp too, appoint or commission agents that will sell stamps to Nigerians for transactional purposes?
In the lager interest of Nigeria, whoever is sponsoring attack on Dr Adewusi-led NIPOST on stamp duty collection right should desist from such action because it is doomed to fail, not because NIPOST has the financial muscle to fight back; but simply because economically, it is, and will not be in the interest of the federal government for FIRS to collect stamp duty on her behalf, for the simple reason that the cost of collecting such tax will far outweigh the benefit!
Oraetoka, information management consultant and researcher, writes from Abuja via [email protected]; 08056031187, 09039094636
