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The Nigeria Customs Service and 62 other Ministries, Departments, and Agencies (MDAs) of the Federal Government would cease direct revenue collection, according to the Presidential Committee on Tax Policy and Fiscal Reforms.
The Federal Inland Revenue Service (FIRS) would now be in charge of collecting money for the MDAs, according to the Chairman of the Committee, Taiwo Oyedele, on Wednesday.
Oyedele, a former Fiscal Policy Partner and Africa Tax Leader at PriceWaterhouseCoopers (PwC), claimed that while Nigeria collects some of the lowest amounts of tax revenue globally, doing so comes at a high cost.
“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, we have 63 MDAs that were given revenue targets last year, no; actually in the 2023 budget,” he said.
“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 function 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”, he said.
Asked for clarity on his comments, Oyedele while fielding questions at Channel TV 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.”
Pushbacks?
The committee chair said there will be pushbacks from stakeholders and others benefitting from the process but the committee’s sole objective is to 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 are more to do to maximise the initiative.
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Furthermore, Oyedele also 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.
N20trn Tax Gap
Oyedele, chair of the committee inaugurated by President Bola Tinubu on Tuesday, said Nigeria’s tax gap is estimated around N20trn as many members of the elite evade paying the exact taxes they should remit to the government.
“As of today we have 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.
“In fact, our plan is to repeal many of the taxes that currently make doing business difficult without introducing new ones and yet collect more,” he said.
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