Still on the tax net

RECENTLY, ahead of the presentation of the 2020 Appropriation Bill by President Muhammadu Buhari,  the Senate passed the Medium Term Expenditure Framework and Fiscal Strategy Paper. Speaking on the occasion, Senate President Ahmad Lawan stated that lack of funds had always been responsible for the poor implementation of budgets in the country. While stressing the need for economic diversification that would take the pressure off crude oil and enhance budget implementation, he urged the Federal Inland Revenue Service (FIRS) to ensure that more Nigerians and corporate entities paid taxes so as to increase government revenue.

The administration mouths a departure from dependence on oil revenue to reliance on revenue from the non-oil sector, but official records put the number of people who paid taxes into federal or state coffers at 19 million. However, a 2018 World Bank report of the same year put Nigeria’s economically active population in the region of 65 million. This translates to a very slim tax payment population. To say the least, this is a very unexciting equation for revenue drive. Yet with a budget of N10.33 trillion for 2020, the government certainly needs a proactive regime of revenue collection.  Over time, the inability of government to shore up its revenues and the poor disposition to tax collection have been fingered as some of the major causes of the country’s fiscal crisis. This is why the national tax body, the Federal Inland Revenue Service (FIRS), must be up productively engaged. If the government is to adequately fund schools, roads and healthcare challenges that appear insurmountable, adequate population of the tax-paying community by the FIRS is a major index in making this achievable.

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We support the move to harvest bigger players into the tax net. For instance, there is nothing to celebrate in big players in the property market resident in key cities across the country refusing to be sucked into the tax net even while controlling huge portfolios that could yield profitable revenues to the national coffers. The government reportedly generated N1.3bn in 2017 and N2.88bn in 2018 from the property market in Abuja and Lagos in the hands of property-owning corporate organisations that hitherto were not in the tax net. Initiatives such as the automation and incentives for taxpayers called the Integrated Tax Administration System (ITAS), e-Registration, e-Filing, e-Payment, e-Receipt, e-TCC (Electronic tax certificate) and VAIDS (Voluntary Assets Declaration Scheme) therefore need to be sustained, incentivised and strengthened.

Apparently, getting more payers into the tax net requires aggressive enforcement of the Taxpayers Identification Number (TIN). According to the FIRS, with the government’s tax registration effort, 45 million taxpayers would have been captured in the tax net by December this year. Also, broadening the VAT collection scope with the adoption of States Accountants Generals (SAG) collection platform; VAT Auto-Collect, integration of GIFMIS platform with ministries, departments and agencies (MDAs) and the e-Service payment option are very positive signals. With a 2015 N3.2 trillion tax drive, the tax net reportedly grew in four years to about N5.3 trillion in 2018, in spite of the recession that hit the economy and an oil price that dwindled to as low as $30 per barrel.

If the country is to achieve its potential of surviving its fiscal dependency on oil and have a fiscal freedom to live without oil, tax drive efforts need sustenance and encouragement, rather than discouragement and dissembling. In 2018, non-oil tax revenue was put at N2.852 trillion, an amount that represented about 50 per cent of the N5.3trillion budget for that year.

Beyond these measures, however, the government has a duty to facilitate manufacturing and production. With a productive economic base, tax drive becomes a fruitful exercise.

 

Nigerian Tribune

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