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The road to N5.3tr tax revenue

By - - [Economy ]

The Federal Inland Revenue Service (FIRS) re-wrote Nigeria’s collection history in 2018, when it collected N5.3 trillion as tax revenue for the year.

FIRS Executive Chairman Tunde Fowler, who made the announcement in Lagos at a retreat: “Parliamentary Support for Effective Taxation of the Digital Economy” also announced that the Service is targeting N8 trillion for 2019.

Fowler said: “FIRS’ generation of N5.3 trillion is significant as it was at a period when oil prices averaged $70 per barrel. Oil price was at an average of $100 to $120 per barrel between 2010 and 2013.”

The FIRS boss noted that the non-oil component of the N5.320 trillion is N2.467 trillion that was (53.62 per cent), while the oil element of the collection was N2.852 trillion (46.38 per cent). From audit alone, the FIRS collected N212,792 billion from 2,278 cases with a huge reduction in audit circle.

Odilim Enwegbara, a development economist and financial expert who serves as Chairman/CEO at Pan Africa Development Corporate Company (PADCC), congratulated the FIRS “given how difficult it is to beat tax evaders in Nigeria, and how difficult it is also to extract tax money from the overly powerful corporate Nigeria and politicians, especially when dealing with a population that believes that it will never pay tax because there is nothing it gains from the government and more so given how extravagant government officials are with public money.”

Enwegbara noted that “our tax collectors have to find themselves dealing with the so-called Nigerian big men, who waste no time in threatening tax collector with “I will deal with you if you ever return here again.” Even foreigners are today the worst tax evaders in Nigeria. They go to the extent of bribing our tax collectors and should the tax collector refuse, these foreigners tend to bypass them to go directly to their bosses and should their bosses refuse they will go to powerful politicians who the tax collectors will have to fear. But if these fails, then, these foreigners tend to hire powerful lawyers to take the FIRS to court where their tax evasion cases are abandoned.”

“That is the condition our tax collectors and enforcers have found themselves all these years. Understandably, Nigeria’s tax to GDP is the lowest among its peer economies. It is also because of this same reason that our budget to GDP is the lowest among peer economies. And the same reason why we have the highest debt service to revenue ratio in the world” Enwegbara told The Nation.

He continued: “As far as I am concerned, our tax to GDP shouldn’t have remained the lowest among peer economies, should FIRS have been as ambitious and as aggressive as it should be. FIRS has no reason not to be generating N16 trillion instead of N8 trillion in 2019 if it has approached the government to empower it to pursue the evaders with serious punitive measures; if the right policies are in place and fully implemented, and above all, if the right tax collection infrastructure is set up. Should these have happened, I don’t see why we wouldn’t be targeting as high as N30 trillion as tax revenue, with as high as N16 trillion from VAT, especially if we increase the VAT rate from the current 5% to as little as 10%, given that most countries have their VAT rate as high as 20%.”

He commended the enforcement department of the FIRS, which, he said, “has done a good job if not, there is no way FIRS should have surpassed its own set target of N5.3 trillion. But a more proactive enforcement team needs to be in place and needs to be fully empowered with the right laws and technology to go after those tax evaders no matter how highly placed in the society.”

He added: “I will like to see the next government to be so aggressive with its tax policies to the extent of setting up Tax Courts along with creating Tax Police. We need these measures if we want to make sure that there is no more hiding place for tax evaders. Such proactive measures will seal off the current huge loopholes especially when accompanied with costly punitive measures. We need to adopt them if we want tax avoidance to become something no one would want to indulge in any longer in Nigeria.

“If we get it right starting with dealing with the tax evaders, and should be as a result be able to grow our tax revenue to as high as N20 trillion in 2019 alone, we will drastically reduce our high current debt service to revenue ratio, now dangerously above 70%.

“In the meantime, I am willing to share with the next government our product the zero-tax-evasion software created to make it extremely difficult for VAT collectors to easily divert the money or for VAT collector to fail to collect such VAT money on behalf of government. Should our software adopted by the next government, we will be increasing the country’s VAT revenue to as high as N20 trillion especially if the next government agrees to double our VAT rate from the present unbelievable 5% to mere 10%. If the next government will have the money needed to invest in social and industrial infrastructure, it will have to grow its tax revenue, starting with VAT which is the easiest way and one of the best sources of tax revenue for most governments in the world.

“As I said earlier we are still far behind all our peer economies in our ability to increase our tax to GDP ratio and our tax to budget ratio. We urgently need it or else the country will be on its way to bankruptcy. It has become inevitable as our debt service to revenue ratio continues to grow, reaching 105% by 2020. Should we get to this point, we will have difficulty borrowing more even if we increase our MPR to 30%. This is because lender will not be ready to lend to us use major part of the borrowed money for debt service. No foreign or local investor will like to continue to invest in such an economy, since those who already invested in it will be looking for how to leave the quasi bankrupt economy.”



Mr. Tope Fasua the Presidential Candidate of the Abundant Nigeria Renewal Party (ANRP) told The Nation that “on the tax please note that the FIRS figure is for Jan to Dec 2018. It surpassed the figure for 2017 which was N4.5trillion. But the same FIRS in 2013 collected N5.007tr.

He said: “There was a devaluation of currency by almost 50% in 2016. This means FIRS collections ought to double from N4.5 trillion where it was then to about N9 trillion.”

“The N8 trillion they are targeting this year is not particularly ingenious but is something we should ordinarily ask for as a matter of accountability to the people. If FIRS had accounted for the devaluation of the naira from N177 to N305 as at 2017, today we ought to be targeting at least N10 trillion. I believe setting this goal can only be beneficial to the people of this country.”

http://thenationonlineng.net/road-n5-3tr-tax-revenue/


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13 Comments Nigeria News
Racheal• 2 weeks ago
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Olite1996• 2 weeks ago
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yetty031009• 2 weeks ago
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olakunle031009• 2 weeks ago
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Jabless• 2 weeks ago
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Danson92• 2 weeks ago
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Irphilippe• 2 weeks ago
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Nwoguemmanuel77• 2 weeks ago
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Iamajtofunmi• 2 weeks ago
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emmanabis• 2 weeks ago
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Fatimabello• 2 weeks ago
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innkayobami• 2 weeks ago
Where the road pass?
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Olarewaju• 2 weeks ago
nice
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