Isaac Anumihe, Abuja
The interest of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) is to expand the size of the national cake, that is, the country’s revenue base.
“So, it is our responsibility to ensure that all taxes of government, which collecting agencies collect on behalf of government. are collected appropriated, accounted for and remitted on time”, says Elias Mbam, its Chairman.
“In the last couple of years, we have been monitoring, reconciling and verifying. And some (defaulting) companies have been made to pay penalties. Some banks are involved. Some other corporate organisations are also involved. That is why I said that between 2015 and now, we have been able to recover over N75 billion. And this year we are proposing that we will recover over N100 billion”, he added.
Mbam also believes that the diversification of the economy through the development of the solid minerals is the secret that can widen the government revenue.
In this interview, he plans to take the campaign of diversification which he started in his first term to a logical conclusion. He also explains how to improve and monitor the nation’s revenue generation activities.
The recently Signed Finance Act will improve revenue generation. Remember that Value Added Tax (VAT) has been increased from 5 per cent to 7.5 per cent. That means more revenue.
As a commission, we are going to intensify our activities in monitoring—–to use all monitoring mechanisms to ensure that leakages are blocked. We believe that before the end of the year we shall be monitoring this electronically. The volume of money will increase. Apart from VAT, the smaller companies whose turnover is less than a N100 million will have a tax reduction. And if they have a tax reduction they will have enough money to reinvest and employ more people and then the volume that will be paid will still bring more money. So, I believe strongly that the new finance act will boost the economy and generate more employment and more revenue.
RMAFC is one of the agents that government uses to ensure that all revenues accruable to the federation account is accounted for, paid and remitted to the federation account. So, it is our responsibility to ensure that all taxes of government which collecting agencies collect on behalf of government are collected appropriated, accounted for and remitted on time.
The law is already there. We have law. If you take government money and refuse to remit it, is it not a crime?. The law will visit you. We don’t need to be armed with guns to apply the law. The law enforcement officers are there. We have Economic and Financial Crimes Commission (EFCC); we have the police; we have Department of State Security (DSS). So, if you contravene any of the acts, certainly you pay for it.
In the last couple of years, we have been monitoring, reconciling and verifying. And some companies have been made to pay penalties. Some banks are involved. Some other corporate organisations are also involved. That is why I said that between 2015 and now we have been able to recover over N75 billion. And this year we are proposing that we will recover over N100 billion.
It is not so easy (to give the number of defaulting companies) because it is quite a number. It is not quite easy to know unless we refer to the records.
States calling for review of revenue formula have that right and it is due for a review. It is part of our mandate and part of our programme for the year to review the revenue formula.
It is a process and as such it is not what you can determine before you start. The process will lead to the answer.Revenue formula and allocation is not determined by wish. And it is not something that you add and subtract. You have to take many things into consideration. What are the responsibilities of each tier of government as provided by the law? What did you do? What did they require to be able to provide these services? What percentage of the services provided for Nigerians are the responsibility of local governments? And what will be the per cent?. It will flow from the process because you will do a study on fiscal matters. You will do a study on how much they spent on each of these responsibilities for over a number of years. And then you can get that figure that is appropriate if it is allocated to this sector.
Outside that, you now look at what are the challenges we have? For instance, the present one (formula) has some allocations for the development of solid mineral. That is key for our diversification process. So, you can say, what do we give that is appropriate for that sector? We have security issues. How far do we factor it into the sharing? We have environmental issues—–flood, erosion, desertification. These are issues that require the attention of government. But there are other factors which are not generally known. For instance, education. We are talking about children’s enrolment. What should be considered and what should be allocated to that sector. You find out that there are lots of things to be considered in revenue allocation formula. It is not enough to say let it be 15 per cent, 16 per cent or whatever. The process will lead to the answer.
We just commenced the process of procurement and you know the procurement process takes an average of three months before it commences. We will give time for bidders to respond. We’ll do the analysis up to the level of contract agreement. It takes an average of two to three months.
By April we should be on board. We see how far we can go at the end of the year.
It was during my first tenure in the commission that solid mineral started contributing to the federation account. I don’t have the exact figure of what they have contributed. But I am aware that they have shared money generated from that sector. I also want to use this opportunity to say that the 13 per cent derivation was also applied in the sharing. So, 13 per cent is not exclusive for oil and gas. It is for any natural activity that generates money for the federation account. So, the states from which the solid mineral was generated got their 13 per cent. It is our major area of concern now to develop the solid mineral sector to be able to generate more revenue to the federation account. We are carrying out advocacy, campaign to states and local governments and to Nigerians in general that we should make use of what is available to us because basically, every state has one form of mineral or the other. This country has the potential that if the solid mineral is developed it can generate more money than money from oil and gas.
We also recommended that the money from the development of natural resources should be used to fund the development of the solid mineral sector because it is vital to our socio-economic development. Until we diversify we run the risk of not having money to pay even salary. Solid mineral is a major area of our diversification. The interest of the commission is to expand the size of the cake instead of dissipating energy on how to share a shrinking cake. So, we are highly committed to the development of that sector. I will encourage the states and local governments to please key in and develop solid minerals in their own area.
We carry out verification of revenue collections from collecting agencies. It is on record that the commission has recovered over N75 billion since 2015 and we are still recovering more.
We have just put up an advert for consultants to express their interest, if they wish, for the next round of verification exercise. So, we intend that this year’s verification will yield over N100 billion.
Go to our website. I think our website is handy. Not only his salary will you see, you’ll also see the salary of everybody. The salaries and other entitlements of all public office-holders—–from the president to councilors at the local governments and the elected positions up to national assembly. They are all there. It is an act of the national assembly.
We have not received any request (from the political office holders to increase their salary) for salary increment. However, it is the intention of the commission to review remuneration of public office holders this year. The process will determine whether it will be a reduction or something else. So, that is part of our primary responsibilities. It is one of the areas we intend to address this year so that the remuneration will reflect current realities
I don’t want to preempt what will be the result. It is a process and the process if followed appropriately will arrive at the appropriate answer.
It is true that some time last year, we constituted a committee charged with the responsibility of reviewing the revenue allocation formula. I want to say that the review of the revenue allocation formula is a process. Some of these processes are not easily seen from outside. These processes include research or fiscal matters; literature review. It is when all these preliminaries are done before we can now invite memoranda from stakeholders, the civil society and Nigerians at large. That we have not done. But the preliminaries of studying fiscal matters and carrying out the literature review of what had been done before in respect of the review of revenue allocation formula is ongoing. The chairman of the committee has assured me that it will not be long they will start inviting memoranda from all levels of government—-the federal, state and local governments; the judiciary, the national assembly, state assemblies, civil societies and Nigerians. It is after they have done that before they go into public hearing. So, very soon you will be hearing more on what is going on. So, we have not dropped the idea but we are still on the preliminaries.