The Executive Chairman of the Federal Inland Revenue Service (FIRS), Muhammed Nami says Nigeria’s fragmented tax system and agencies were responsible for the country’s tax revenue losses.
In a statement made available to journalists Wednesday morning, Special Assistant (Media & Communication) to the Executive Chairman of FIRS, Johannes Oluwatobi Wojuola, quoted Nami as saying this at the Senate Stakeholder and Public Hearing on the 2023 Medium-Term Expenditure Framework (MTEF) and Fiscal Paper Tuesday in Abuja.
Nami said: “In Nigeria we have 774 Local Governments, each of them has a tax authority; each of the 36 States, too, has revenue authorities with their respective mandates; then we have the FIRS and Customs. What I would advise for efficiency and to do things in line with global best practices is that we should amend our tax laws to harmonise the tax agencies and tax system.
“With this, when the FIRS, for instance visits ‘Company A,’ it can serve one assessment on the company, and also on the individual that owns the Company; it can also ask the company to account for the VAT it has collected, and ask for PAYE it has deducted from its employees as well as the Personal Income Tax of the Promoters of the Company.
“This is currently not the case, and as such has created a huge gap in our tax system.”
On his part, Chairman Senate Committee on Finance, Senator Solomon Adeola urged the federal government to explore novel strategies that would shore up revenue for the federation, including restructuring the remitting formula for Government Owned Enterprises (GOEs).
According to the Committee, the federal government should consider a situation where GOEs remit 100 per cent of their revenue to the government, while being funded by a determined percentage of cost of collection as is the case with the FIRS and Customs.
The Committee frowned at the current situation where some government agencies were retaining hundred percent of their revenue, spending from it, and paying government operating surplus.
The Committee recommended that these GOEs should keep only 5 to 15 percent as their cost of collection from the revenue generated to cater for their salaries, operational expenses and capital expenditure as is currently done by the Nigerian Customs and FIRS, while remitting the difference of 85 to 95 percent of their gross earnings as against the current practice of operating surplus where they spend between 70 and 90 percent of their gross earnings. The Committee further urged the federal government to apply the same logic to the running of government owned universities by providing funding for only research and infrastructure needs through the Education Tax already being administered by the FIRS, while allowing the Vice Chancellors to use the revenue from school fees and other innovative revenue sources to run the universities.
