Ray of hope from FIRS

At this time when the global economy has tumbled into recession and confounded bookmakers, most financial indicators are negative and show red signals. Revenue projections are darkening from gloom to doom, due to silence in factories where wealth is produced and the daily bread of workers baked. Nigeria is caught in the chaotic and confusing […]

At this time when the global economy has tumbled into recession and confounded bookmakers, most financial indicators are negative and show red signals. Revenue projections are darkening from gloom to doom, due to silence in factories where wealth is produced and the daily bread of workers baked. Nigeria is caught in the chaotic and confusing atmosphere as commodity prices, especially those of oil and gas, have sunk into a dark depth where the cost of a barrel of crude oil has fallen below its production cost. Though bilateral and multilateral efforts are being galvanised to rescue oil prices from the pit, the outcome is not significant to put a smile of the forlorn faces of the population  that depend on the drop of oil to survive.

There is, however, a ray of hope emerging from unexpected quarters – the Federal Inland Revenue Services (FIRS). One hundred days under the leadership of Mallam Muhammad Nami, FIRS has recorded remarkable revenue collection to dwarf the best results of predecessors, and to raise hopes that succor could emerge from Internally Generated Revenue (IGR), now that commodity prices are failing Nigeria.

Mallam Nami gave this indicator recently when he explained the emerging situation thus, “I can say with all sense of modesty that we have achieved a lot since we came on board. Although I would have liked to leave this to posterity but a few points will suffice.” What he labelled as ‘modesty’ is actually a mind-blowing record. Mallam Nami was appointed Executive Chairman of FIRS in late December 2019. His first financial report was for the first quarter of 2020. In that space, the Service collected N1.2 trillion as tax revenue on behalf of the three tiers of government.

Comparing this collection with what was collected over the same period in 2019, there is a record of 15 per cent increase in tax collection. In the first quarter of 2019, the FIRS collected N1,046 trillion. This year’s collection rate was achieved in spite of the vagaries in the economy, caused by the uncertainty that accompanied COVID-19 outbreak. The outbreak has affected many businesses because of its impact on China.

Many manufacturing companies in Nigeria which have paid for raw materials being imported from China have been kept in abeyance as the pandemic has disrupted commercial activities in the South-East Asian country. By implication, tax revenue from the manufacturing sector is deflated. It is in this context that the remarkable revenue collection is worth celebrating.

The amount posted for the first quarter was possible as a result of an improvement in the efficiency and effectiveness in tax collection in several areas. For instance, the Petroleum Profit Tax (PPT) to Capital Gain Tax (CGT) increased by some 568% in spite of the crash in the international prices of petroleum products and the impact of COVID-19 pandemic.  Also, Company Income Tax (CIT) increased by 152%, as Gas Income and NITDEF also increased by 420% and 522% at the Customs Level and 13% at thee Non-Import Level. Apparently, to achieve this result, previous avenues of revenue leakages were blocked under the new scheme. The new Executive Chairman put in place a wide-range reforms to ensure that the FIRS is repositioned to perform optimally.

For instance, Mallam Nami’s predecessor made use of tax consultants for revenue collection. The implication was that the consultants received commission on revenue collected. However, when Nami took over, he had to halt that practice, by motivating the staff of FIRS to enter into the field and embark on tax collection.

Apart from motivating staff members to meticulously and conscientiously collect revenues that accrue to the country, the Executive Chairman deployed technology to make it easy for stakeholders to pay their taxes. Information Communication Technology (ICT) did not just make it easy for the agency to collect that, but it also blocked tax leaks. This may be a lesson to many revenue generating agencies of government who resort to the use of consultants instead of motivating employees through enhanced salary and the deployment of ICT.

With his performance, there is optimism in the country. In the 2020 budget, FIRS has been given a target of N8.5 trillion tax collection for the fiscal year. Though the coronavirus pandemic may frustrate efforts to raise this huge sum of money, Mallam Nami believes that with indirect tax earning from Stamp Duty and the like, this revenue projection could be realised, if not surpassed. Already, he has begun to exchange ideas with stakeholders, especially chief executives of banks and related financial institutions, to ensure efficient and effective collection of Stamp Duty.

He explained more, “The tax culture in Nigeria at the moment is really not encouraging, if you ask me. We are also going to work on that too as we move along. We will apply some level of diligence in collecting taxes particularly indirect taxes like VAT and the stamp duty which the Finance Act 2019 gives us the right to collect. The FIRS is determined to do everything possible to insulate the Nigerian economy from a probable downward slide or recession which many are predicting would hit the global economy as a result of the pandemic. Through the indirect taxes available to government like VAT and stamp duty, etc, we are confident that FIRS would be able to generate enough revenue for the government to fund its 2020 budgetary provisions (particularly the budget deficit) and make good its promise of providing key infrastructures, social amenities, fight insecurity, and stop further borrowing.”

It is important that the federal government gives Mallam Nami all the necessary support to succeed. This is in the context of the arrows being shot at him from several quarters, probably because he ensured that it is no longer business as usual at FIRS. Those who benefitted from previous leakages may not smile at him. The dirt being thrown to smear his name in the social media can be situated in the fact that new reforms to make tax payments easy and transparent have been put in place. Therefore, government must encourage him, because FIRS is the agency of government from where there is ray of hope of generating revenue to run the country at this time. Mallam Nami’s first good foot forward must be supported. It gives the positive signal that a well-harnessed IGR can hold the country together in the shadow of COVID-19.

Abubakar contributed this piece from Abuja.