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Nigeria is the Generation to Improve Tax Revenue

The Executive Chairman of the Federal Inland Revenue Service (FIRS), Mr. Babatunde Fowler, has reassured Nigeria’s international partners, particularly the International Monetary Fund (IMF) and the World Bank that the country is gradually improving its tax collection system.

Fowler, who was a guest on the ARISE Television, a THISDAY Newspaper sister television network, yesterday noted that the impact of the current administration’s readiness to improve on its tax system as part of its diversification drive brought about 40 per cent increment in taxes collected in the first quarter of 2017 compared to 2016.

Tax revenue constitutes a major component of national income in a modern economy. It is the dominant source of government recurrent revenue in most developed countries. The world`s largest economy which is the United States of America, is tax revenue driven. The impact of taxes may not be as significant in developing countries most of which are fueled by commodity export earnings.

The Nigerian economy is heavily dependent in crude oil export receipts. The immense potentials of taxes as a major engine room for fueling the economy have not been exploited. Oil is a wasting national asset and the major components of tax revenue in Nigeria. The positive danger of over-reliance on crude oil export receipts to drive the economy seems to have raised to the front burner of current economic policy discussions. The need to expand the tax yield through improved tax system administration has become a major economic policy issue.

“One thing you can use to judge a tax agency is the revenue generated and I can say from the first quarter of this year, our generation is 40 per cent higher than the same period last year. We have been working with other state revenue generation agencies and last year, we are happy to have included over four million individuals to the tax net,” he said.

Noting that with about 20 million persons captured into the tax net out of an expected 60 million taxable individuals and corporate organisations both in the formal and informal sectors, Fowler said Nigeria currently has a shortfall of about 40 million taxable incomes.

Asked how the government intends to bridge the gap and ensure tax compliance among defaulters, he said: “For instance, we have arrangement with immigration services; those who would want passport or visa renewal; every service you want from government, they would ask for your tax information. We also listened to the business sector where they have complains. We have to do some tax reforms.

“So, basically, we are trying to meet the tax payers’ aspirations and make sure that we change our tax laws and policies as required.”
According to him, for market women and others in villages who may not be easily captured, they would easily make the habit of paying tax when government puts tax income into judicious uses. “It is a matter of engagement. It is a matter of state and federal government showing people that this is not oil revenue. That it is tax revenue.”

On the issue of Value Added Tax (VAT), where Nigeria is regarded as one of the lowest collectors with five per cent as compared to countries like South Africa, Namibia and Mozambique and Rwanda where they collect 14, 15 and 16 and 20 per cent respectively, Fowler also said Nigeria is making frantic efforts to improve VAT collection.

“We have engaged a few major stakeholders; the telecoms, aviation to ensure first of all that when people pay their VAT, it is remitted to government. We have also signed MoU with states to ensure that everyone who should pay VAT pays. Then we issue certificates that you put in your office,” he added.

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