Internal revenue scams

No doubt stopping leakages, wastages and corrupt practices will go a long way to improving government finances, but it’s also true that government needs to find alternative means of revenue generation. Diversification of government income away from over dependence on oil is imperative if the nation is to survive the cash crunch. It’s conventional wisdom […]

No doubt stopping leakages, wastages and corrupt practices will go a long way to improving government finances, but it’s also true that government needs to find alternative means of revenue generation. Diversification of government income away from over dependence on oil is imperative if the nation is to survive the cash crunch. It’s conventional wisdom that Internally Generated Revenue (IGR) must be increased. According to the National Bureau of Statistics, while Lagos State generates the highest IGR, equivalent to approximately 77% of its budget, IGR in the majority of States is less than 10% of budgeted expenditure. Disastrously for the nation high oil revenues lulled government at all levels into a false sense of security `making them pay little or no attention to running efficient operations or expanding their tax base. Consequently every year budgets project the same figures for IGR while personnel and administrative costs increase. Unfortunately internal revenue generation has been corrupted in the same manner our political leaders corrupt every good idea.
IGR has become the most popular undetectable means of accumulating ill-gotten wealth. Governors and Ministers wary of tampering with federal allocations and risking prosecution by the Economic and Financial Crimes Commission (EFCC), have a field day exploiting IGR loopholes. It’s an open secret that tax collection has become a means of scamming both government and the public through the use of “consultants”.  The system is simple. For example if government collects say N100 million annually as revenue from hotels instead of a projected N500 million, a contract for collection of hotel tax will be given to a “consultant” who will be asked to harass hoteliers, remit N200 million to government coffers and keep everything they collect above this amount. As a result, government books show that IGR has been doubled, while the “consultant” and whoever awarded the contract share the hundreds of millions difference. In the majority of cases IGR “consultants” make more money for themselves than for government! Before the IGR craze all government revenue was paid directly into government coffers and a treasury receipt issued. These days “consultants” operate bank accounts in the name of a Ministry Department or Agency (MDA).
 Unsuspecting but patriotic individuals who pay into such “government” accounts are, unaware the money is entering private accounts! Due to the lucrative nature of the business “consultants” viciously go about their business by intimidating the public, seizing private property and extorting money without recourse to the law courts. The only saving grace is that because “consultants” issue their own receipts and don’t remit the bulk of the money to government these tax demands are negotiable and there is room for “settlement!” The pursuit of IGR has also encouraged extortionist schemes. In this manner the Federal Road Safety Corps (FRSC) forced motorists to replace their number plates and driving licenses for no good reason, Youth Corpers are forced pay to find out where they are to serve their nation, international travellers are forced to pay for new passports every five years, and unemployed graduates are asked to part with thousands to obtain application forms for government jobs.
 The most wickedly, conscienceless scheme was the immigration recruitment fiasco, a well reported scam in which “consultants” realized over N700 million from the death of applicants. In addition to all these ungodly shenanigans the lack of co-ordination in internal revenue generation results in different individuals obtaining approval for revenue generation schemes which will be financially beneficial to government (and to the approving official personally).
The end result is multiple-taxation. For example a struggling restaurant owner who owns trade vehicles will, in addition to personal income tax and tenement rate on their residence, be forced to pay restaurant tax, education tax, business premises tax, sign-board tax, commercial vehicle tax, mobile signboard tax, and environmental tax each collected by a different profit making “consultant”. As rotten as the IGR situation is, in truth the real reason citizens object to paying taxes isn’t the manner in which it is collected, it’s that they don’t feel obligated to government. In Nigeria there is a widely held belief that government only favours political appointees and top civil servants. This is hardly surprising because top government officials ride brand new expensive jeeps and purchase all the choice properties in exclusive residential areas. Even the few government services and infrastructure that exist are the result of inflated contracts. If the president-elect is serious about his vow to revamp the economy and fight corruption vigorously, his administration must end the scams associated with IGR. Unless the use of “consultant” tax collection contractors is outlawed and the privileges enjoyed by political office holders seriously curtailed, the general public won’t take kindly to attempts to increase taxation.