Fowler has committed no foul
Barring all odds, Babatunde Fowler, the Executive Chairman, of Federal Inland Revenue Services(FIRS) will answer a presidential query issued him by the Chief of Staff to the President, Abba Kyari, demanding explanation on the variance in tax collections, i.e between actual collections and budgeted collection for the country between 2015 and 2018 Aside from asking […]
Barring all odds, Babatunde Fowler, the Executive Chairman, of Federal Inland Revenue Services(FIRS) will answer a presidential query issued him by the Chief of Staff to the President, Abba Kyari, demanding explanation on the variance in tax collections, i.e between actual collections and budgeted collection for the country between 2015 and 2018
Aside from asking him to provide a detailed analysis in the variance of the collection between 2015 and 2018, the query also asked him to provide explanation why the collection in the aforementioned period is worse than the one collected between 2012 and 2014, prior to the coming to power of the Muhammadu Buhari-led government.
While one may not pick issues with query which is a routine administrative matter in both the public and private sectors, the manner in which the Fowler query came just when his first term of five years has practically come to an end with the hope that the President would renew his mandate in office going by the excellent work he has done in the last four years providing a progressive template for tax collection in the country leaves a bad taste in the mouth.
All the same, the query leaves much to be desired. By no means is this article intended to hold forte for Fowler, the man credited with raising the tax profile of Lagos State when he held sway as the state’s chief tax officer in charge of Lagos Internal Revenue Services; the essence of this intervention is to provide some generally valid background as to why some discrepancies may have existed in the tax collections for the period under review now.
It is an elementary fact in Economics that when an economy undergoes continuous contractions in its Gross Domestic Product(GDP), all the productive sectors of the economy get paralyzed; productivity is in limbo which invariably leads to reduction in tax payment from all taxable entities. Once there is reduction in tax payment, of course, tax collection is endangered.
It’s an irrefutable fact that Nigeria was in severe economic recession for the better part of 2015 to 2018. Virtually all the sectors of the economy were negatively affected leading to several losses of jobs. Some companies, most especially those operating within the domain of small and medium enterprises even packed up because of the severity of the recession.
If there were job losses with companies closing operations in the country, it is a given, therefore, that there would be reduction in tax payment. Only those employed with taxable income can pay tax. The tax generating strategy of FIRS under the leadership of Fowler, no matter how brilliant it might have been, could not have performed wonders when there was economic recession. Who taxes a people on the verge of economic depression? Any attempt to do that is an invitation to chaos.
Again, it is a simple fact that what is budgeted for, in most cases, is always different from what is realized. What is realized may surpass what is budgeted for in a period of economic boom and vice versa when the economy is doomed. This perhaps will explain why the actual collection between 2015 and 2018 is quite different from the budgeted collection. It is the same way with our annual national budget.
By the way, the variance in tax collection between 2015 and 2017 on one hand, and between 2012 and 2014 on the other hand when former President Goodluck Jonathan was in power can be narrowed down to the recession that characterized the former as against the latter when the economy was a bit okay, though not at optimal level. More so, the receipts from crude oil sale between 2012 and 2014 were huge enough to fund other non-oil sectors which helped in no small way to boost economic activities nationwide. We are all witnesses to the shortfalls in oil revenue during the first tenure of President Buhari. The non-oil sectors are still not generating much compared to the oil sector, notwithstanding the government’s effort at diversification. How can tax payment and collection be viable in an economy that’s battling to stay afloat? It will require some extraterrestrial miracle for that to happen.
Like I stated from the outset, Fowler is competent enough to provide explanations on the issues highlighted in the query. In any case, there is consensus among industry experts that he has done an essentially good job as the country’s chief tax officer by blocking leakages, accommodating more taxable Nigerians within the tax dragnet without necessarily creating any tax burden on the populace.
President Buhari needs Fowler for the. next four years to sustain and build on the modest gains recorded so far in the country’s tax system. But then, it is the President’s prerogative to renew or not the taxman’s mandate, though.
Dayo Williams lives in Abuja