THE Executive Chairman, Federal Inland Revenue Service (FIRS), Mr Babatunde Fowler, on Monday replied the query issued to him by the Chief of Staff (CoS) to President Muhammadu Buhari, Abba Kyari, saying he actually outperformed his predecessors when necessary indices are considered, despite the recession that lasted from 2016 to 2017.
Kyari had given Fowler up till Monday to explain why the service had been unable to meet its revenue targets between 2015 and 2017, unlike before he was appointed to the position.
He also asked Fowler to explain why FIRS collected more revenue between 2012 and 2014 than between 2015 and 2017.
According to the FIRS boss, the service actually performed better in terms of non-oil revenue during the period, despite the recession, adding that fall in oil revenue tax fell mainly because of the sharp fall in both price and production of crude oil.
In the reply, a copy of which is in possession of the Nigerian Tribune, Fowler said the “total actual collection for the said period was N14.5 trillion while total actual collection between 2016 and 2018 was N12.6 trillion.”
Fowler explained that of the N14.5 trillion generated between 2012 and 2014, oil revenue accounted for N8.3 trillion or 57.28 per cent, while non-oil accounted for N6.2 trillion or 42.72 per cent, adding that between 2016 and 2018, out of the N12.6 trillion generated, oil revenue accounted for N5.1 trillion or 40.65 per cent and non-oil revenue, N7.5 trillion or 59.35 per cent.
According to him, while FIRS management had control of non-oil revenue collection figures, oil revenue collection was subject to more external forces.
He asked Kyari to note that non-oil revenue collection grew by N1.3 trillion or 21 per cent within the period 2016 to 2018.
“Kindly note that the total budget collection figure during 2012 to 2014 stood at N12.1 trillion, compared to N16.7 trillion for the period 2016 to 2018, which represents an increase of 37.58 per cent.
“Please note that the variances in the budgeted and actual revenue collection performance of the service for the period 2016 to 2018 was mainly attributed to the following reasons,” he explained.
Fowler further stated that low inflow of oil revenue for the period, especially petroleum profit tax (PPT), was due to fall in the price of crude oil and reduction of crude oil production, notwithstanding government efforts to diversify the economy, adding that oil revenue remained an important component of total revenues accruable to the federation.
“The price of crude oil fell from average of $113.72, $110.98 and $100.40 per barrel in 2012, 2013 and 2013 to $52.65, $43.80 and $54.08 per barrel in 2015, 2016 and 2017.
“There was also a reduction in crude production from 2.31mbpd and 2.20 mbpd in 2012, 2013 and 2014 to 2.12mbpd, 1.81mbpd and 1.88 mbpd in 2015, 2016 and 2017 respectively,” he added.
Fowler also noted that the Nigerian economy also went into recession in the second quarter of 2016, which slowed down general economic activities, adding that “tax revenue collection (CIT and VAT), being a function of economic activities, were negatively affected but actual collection of the above two taxes were still higher in 2016 to 2018 than in 2012 to 2014.
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“During the year 2012, 2013 and 2014, GDP grew by 4.3 per cent, 5.4 per cent and 6.3 per cent while in 2015, 2016 and 2017, there was a decline in growth to 2.7 per cent, -1.6 per cent and 1.9 per cent respectively. The tax revenue grew as the economy recovered in the second quarter of 2017.
“It is worthy of note that strategies and initiatives adopted in collection of VAT during the period 2015 to 2017 led to approximately 40 per cent increase over 2012 to 2014 collections. In 2014, VAT collected was N802 billion compared to N1.1 trillion in 2018.
“This increase is attributable to various initiatives such as ICT innovations, continuous taxpayer education, taxpayer enlightenment, etc embarked upon by the service,” he added
Fowler stated that when he took office as FIRS chairman in August 2015, the targets for the two major non-oil taxes were increased by 52 per cent for VAT and 45 per cent for CIT.
“Notwithstanding the increase, FIRS has, in line with the Federal Government’s revenue base diversification strategy, has grown the non-oil tax collection by over N1.3 trillion (21 per cent) when the total non-oil tax collection for 2016 to 2018 is compared with that of 2012 to 2014.
“Therefore, I am confident that our current strategies and initiatives will improve revenue collections and meet the expectations of government,” he replied.
Meanwhile, the Presidency has denied speculation that Fowler was under investigation, following a query issued to him by Kyari.
In a statement issued in Abuja on Monday by Garba Shehu, Senior Special Assistant to the President (Media and Publicity), the Presidency said following reports making the rounds in some media outlets, it had become necessary to state categorically that the chairman of the FIRS “is not under any investigation.”
The statement explained that the letter from the CoS “on which the purported rumour of an investigation is based merely raises concerns over the negative run of the tax revenue collection in recent times.”
It stated that taking a cue from Monday’s presentation of Vice-President Yemi Osinbajo at the presidential retreat for ministers-designate, federal permanent secretaries and top government functionaries, which dwelt on an “overview of the policies, programmes and project audit committee,” a body he chaired, projected revenue of government fell behind recurrent expenditure, even without having factored in capital expenditure.
It added: “Consequently, it would appear that the country might be heading for a fiscal crisis if urgent steps are not taken to halt the negative trends in target setting and target realisation in tax revenue.
“Anyone conversant with Federal Executive Council deliberations would have observed that issues bordering on revenue form the number one concern of what Nigeria faces today and, therefore, often take a prime place in discussions of the body.
“It is noteworthy and highly commendable that under this administration, the number of taxable adults has increased from 10 million to 20 million with concerted effort still ongoing to bring a lot more into the tax net.”
The Peoples Democratic Party (PDP), however, observed that the revelation of variances “pointing to the siphoning of trillions of naira, taxpayers’ money” collected by the FIRS had further confirmed the party’s stance that the All Progressives Congress (APC)-led presidency was neck-deep in corruption and looting.
A statement issued in Abuja on Monday by its national spokesman Kola Ologbondiyan noted that the discovery of variances in the remission of taxes vindicated the party’s concerns about underhand dealings and frittering of monies collected as taxes in the last four years.
The PDP posited that a critical study of the leaked correspondence from Kyari to Fowler in the wake of the revelations of financial discrepancies at FIRS, “totally betrays the complicity of the cabal in the Buhari presidency.”
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