With the price of oil tumbling drastically to $48.86 per barrel in October 2015, after which it slid further to $44.82 the following month and $37.80 in the last month of the year, the signs were bold that Nigeria was facing a major economic crisis. The implication of the slump in revenue derivable from oil, the major source of funding for country’s infrastructural and human development aspirations, was that the then new administration of President Muhammadu Buhari had flown into the most inclement weather possible. Public expectations of a national boom time were sky-high, but were almost immediately shattered, as government at all levels was hamstrung in the discharge of its responsibilities and obligations.
At the state level, government, with the exception of a handful of states, for example, was unable to pay civil servants’ salaries and pensions to retirees let alone develop ideas for life-altering infrastructure projects and human development initiatives. Earlier in August that year, with the Federal Government left with no option than to look internally for revenue, especially from previously neglected sources, President Buhari appointed Mr. Tunde Fowler as chairman of the Federal Inland Revenue Service (FIRS). Fowler’s appointment was widely well received because he had been a consistently vocal voice against the country’s heavy reliance on oil revenue and, more crucially, on account of his headship of the Lagos State Internal Revenue Service (LIRS), during which the internally generated revenue (IGR) rose from a monthly average of N3.6 billion in 2006 to over N20 billion between 2006 and 2015. He met Lagos as a state unable to generate sufficient revenue from the vastness of its economic activities, and reformed revenue collection and administration processes to make Lagos the model of the genre.
Yet, there was the question of whether or not he was capable of reprising what he did in Lagos State at the national level. That question, the figures show, has been answered with a resounding “Yes” in four years, a period during which the country slipped into recession. A little over a week ago, it was announced that the country’s taxable population figure was approaching a record 45 million. In 2015, the figure was 10 million, rose to 14 million in 2017, and 19 million in 2018.
Last year, the FIRS collected N5.32 trillion, the highest ever in the history of the federal revenue agency. The preceding year, the agency collected N4.02 trillion and, in 2016, N3.3 trillion. The revenue growth, in spite of the country’s economic challenges, has been attributed to a variety of reform initiatives conceived to expand the tax net, block leakages and make tax collection methods more efficient. It has also been helped by enhanced collaboration with other stakeholders such as the Joint Tax Board (JTB) and other government agencies and a virile enforcement strategy, resulting in improved taxpayer compliance and collection of huge tax debts from defaulters, review of the National Tax Policy, amendment of tax laws and use of technology.
The use of technology, which has resulted in the ease of tax payment and blocking of leakages, is evidenced by the introduction of e-Registration, e-Filing, e-Payment, e-Receipt, e-TCC (Electronic Tax Certificate), e-Stamp Duty, AutoVAT Collect, Integrated Tax Administration System (ITAS) and Government Information Financial Management Information System (GIFMIS). Among steps taken to expand the tax roll was the launch of the Voluntarily Assets and Income Declaration Scheme (VAIDS), which provided an opportunity for individuals and corporate entities with tax liabilities to regularise their tax affairs in exchange for freedom from prosecution, penalties and tax audits. Through VAIDS, a total of N17 billion was collected in unpaid taxes within the first six months of the scheme’s implementation.
The use of various e-payment channels has ensured that taxpayers can pay their taxes from anywhere in the world, at any time, as well as making it possible for taxpayers to download their receipts. Taxpayers can also apply for and receive their tax clearance certificates online immediately.
A major shift in focus to non-oil revenue has seen collection grow from N2.149 trillion in 2016 to N2.852 trillion in 2018. Oil tax revenue also increased from N1.15 trillion in 2016 to N1.52 trillion in 2017 and N2.52 trillion in 2018. Value Added Tax (VAT) collection in 2018 went above N1 trillion. In the preceding year, VAT yielded N972 billion and, in 2016, N828 billion collection. The rise in VAT revenue has largely been occasioned by the automation of the process, which allows for automatic collection. The new auto collection scheme resulted in 31 per cent VAT increase over the N25 billion collected in 2017. The FIRS was able to collect N13 billion as a result of the automated deductions at source and remittance of VAT and Withholding Tax from state governments. The automation scheme has also facilitated information exchange between the FIRS and third-party databases and other government agencies. Automation has equally impacted the Stamp Duty collection process, which in 2016 was N5.6 billion, N10.9 billion in 2017 and N15.66 billion in 2018.
The FIRS has also upped the tempo of its enforcement by initiating audits through which under-remittances were discovered. These yielded N12 billion previously unpaid by taxpayers. As part of its diligence, the agency discovered 6,000 businesses with an annual banking turnover in excess of N1 billion but that were unregistered for tax and made no payments. Through enforcement of relevant tax legislations, the agency recovered N21.75 billion from such companies, which have continued paying the balance in instalments. Similarly found were 45,361 businesses with banking turnovers of between N100 million and N999 million, many of which were found to be non-compliant with tax laws. Through another diligence initiative, the FIRS generated N1.33 billion in 2017 and N2.88 billion in 2018 from Lagos and Abuja-based property-owning corporate organisations that were not in the tax net. The various initiatives have been implemented alongside continuous tax education/enlightenment programmes, which have seen the agency interacting robustly with taxpayers to sensitise them to their obligations.
•Mbah, a tax consultant, writes from Lagos