RECENTLY, President Bola Tinubu inaugurated the Presidential Committee on Fiscal Policy and Tax Reforms in Abuja. The committee is chaired by former Fiscal Policy Partner and Africa Tax Leader at PriceWaterhouseCoopers (PwC), Taiwo Oyedele, and boasts experts from both the private and public sectors as members. Speaking on the occasion, Tinubu said: “Within the scope of this mandate, the committee shall have as its objective the advancement of viable and cost effective solutions to issues such as the multiplicity of revenue collection agencies, the high cost of revenue administration, the excessive burden of compliance on ordinary taxpayers, the lack of effective coordination between fiscal and other economic policies within and across levels of government and poor accountability in the utilisation of tax revenues. The committee is comprised of experts from both the private and the public sector. I have given them a strong mandate and I expect their report to cover tax reform, fiscal policy design and coordination, harmonisation of taxes and revenue administration among other items. Our target is to improve Nigeria’s revenue profile while making the business environment more conducive and internationally competitive. Our aim is to transform the tax system to support sustainable development, while, at the same time, achieving a minimum of 18 percent Tax to GDP ratio within the next three years.
Tinubu added that in order to ensure seamless implementation, the committee would be empowered not merely to make recommendations; but to also provide practical support to the government in the execution and delivery of the recommended changes. As he noted, “The committee is expected to achieve its mandate within a period of one year. They are, in the first instance, expected to deliver a schedule of quick reforms which can be implemented within thirty days. Critical reform measures should be recommended within six months and full implementation will take place within one calendar year.”
Subsequently, a member of the committee and Chairman Forum of Finance Commissioners in the country, Mr. Wale Akinterinwa, said that it would soon come up with policies that would favour the masses. Akinterinwa, who is the Ondo State finance commissioner, said: “Our committee was inaugurated to amend Nigeria’s tax laws and fiscal policy to improve government revenue. I am sure by the time the committee is done with their plans, you would see that we had come up with policies that would favour the masses…We must also try to move away from being an import-dependant country and patronise our local manufacturing.” It is instructive that in setting up the committee, the Tinubu-led Federal Government indicated that it was aiming to eliminate multiple taxation. The committee has in fact suggested that about 63 agencies could lose their revenue-generating status, as they had under-performed over the years.
To be sure, we are not necessarily against tax review, particularly the elimination of multiple taxes. If anything, the fact that the Tinubu administration listed the issue as a cardinal point of interest means that it has been listening to the outcry by business owners who have complained bitterly about the issue as an impediment. The point has to be noted, however, that the key issue is efficiency; whatever step the government takes has to deliver the best results, or it would be counter-productive. Certainly, the government needs to block leakages in the system. However, in the new attempt at tax reforms aimed at eliminating multiple taxation and other ills, the presidential committee has taken the radical decision to make the Federal Inland Revenue Service (FIRS) the sole revenue collector for government while putting a stop to revenue collection by some other 63 agencies of government hitherto engaged in the business. But the question arises whether it is really the multiplicity of agencies collecting tax revenue that is the problem or a more fundamental problem of corruption permeating the general business of government across all agencies.
What, for instance, has become of the Treasury Single Account (TSA) that the government thought would eliminate corruption by providing a single account for all revenues? Why does the committee have the impression that the FIRS is less corruption-prone than other revenue collecting agencies? If FIRS takes over revenue collection and the corruption in the system is not addressed, the situation will still be the same: the government will keep getting short-changed. Besides, it is also open to question whether the agency has the capacity to handle the new responsibilities about to be thrust upon it, particularly as key issues relating to VAT collection and FIRS’s own existence are still before the Supreme Court.
We recognise the need to streamline the affairs of government. But we do not think that the tax committee has acknowledged the real challenge. We believe that what is more important is to put in place the necessary structures and proper oversight mechanisms that would insist on revenue-collection agencies, whether single or multiple, doing what is right every time, and not just the superficial toying with processes of tax collection. Merely taking away revenue collection duties from some agencies and handing them over to another agency does not address the key question of thorough oversight that would make all government agencies, including revenue-collecting ones, to work and function well. Therefore, working to stop the underlying corruption in government processes is the way to go, not simply changing the locus of the pervasive corruption in the system from multiple agencies to one or few agencies.
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