Analysts see more taxing revenue targets for FIRS

The Federal Inland Revenue Service (FIRS) is faced with larger tax revenue target following the recent decline in oil price, which affects government financial buffers, analysts have said.

The FIRS report for third-quarter (Q3) 2014 showed it collected a total of N1.19 trillion, compared with N1.45 trillion in Q2’14.

“The decline arose because the bulk of its companies income tax (CIT) was collected on schedule (and earlier than in 2013). Nigeria’s VAT rate of 5 percent is among the lowest globally,” noted analysts at FBN Capital.

They said: “The oil price since mid-June has concentrated the minds of policymakers on the paucity of non-oil revenue. Collection amounted to just 3.7 percent of rebased GDP in 2013.”

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The coordinating minster of the economy, Ngozi Okonjo-Iweala, hopes that the FIRS/McKinsey joint initiative will yield N460 billion over 2015-17, on top of the annual level in 2014.

She has estimated that a doubling of the rate would yield a further N610 billion annually.

The FIRS is the largest but not the only revenue collection agency. It is responsible for petroleum profits tax on the oil side, and CIT, personal income tax, VAT (non-import) and other levies on the non-oil side. It collected N4.81 trillion in 2013 out of total federally collected revenue of N9.76 trillion.

The FGN’s initial proposals for the 2015 budget, presented to the National Assembly on December 17, include some overdue taxes on luxury goods and services, a review of waivers and exemptions, and an extension of the McKinsey and Co consultancy.

“There are too many taxes, often duplicated, and too few taxpayers. The FIRS has achieved its revenue targets every year but one since 2000. This could indicate that its targets should be more challenging. It met its full-year target last year in November, and was promptly challenged by the FGN to raise an additional N75 billion,” the analysts said.

Iheanyi Nwachukwu