The Presidential Committee on Tax Policy and Fiscal Reforms said that the Nigeria Customs Service and 62 other Ministries, Departments, and Agencies (MDAs) of the government will have to eventually stop their direct revenue collection responsibilities.
Taiwo Oyedele, Chairman of the Committee, said this during an interview on Channels Television Sunrise Daily Breakfast programme on Wednesday.
Oyedele, who has more than 20 years of experience in fiscal and tax policy design working at PriceWaterhouseCoopers (PwC), highlighted the deficiencies in Nigeria’s revenue collection from taxes, labelling it among the lowest globally. However, he pointed out the irony that the cost of collection is unusually high.
“Ironically, our cost of collection is one of the highest. And the reason for that is that we’ve got all manners of agencies. The Federal Government alone, we have 63 MDAs that were given revenue targets last year; no, actually in the 2023 budget,” Oyedele emphasised.
He said that those agencies collecting revenue are faced with two major challenges. First, these entities are being distracted from driving economic growth. Second, they weren’t initially designed to be revenue collectors, which seriously affects their efficiency in this regard. His proposed solution suggests that the Federal Inland Revenue Service (FIRS) be the only agency tasked with the responsibility of revenue collection for these MDAs.
The benefits are twofold: reduced collection costs and enhanced efficiency. “By relocating the revenue collection duties to the FIRS, we can tackle these issues head-on. It means these institutions can return to focusing on their core tasks, ultimately leading to a healthier economy,” Oyedele stated.
When asked to provide more clarity on that position, he said, “If you are Customs, focus on trade facilitation, border protection, and if you are NCC (Nigerian Communications Commission), just regulate telecommunications. You are not set up to collect revenue.
“It can be your revenue, and someone else can collect it for you. There will be more transparency because you will see what is being collected and what is being accounted for properly. It is also a way of holding ourselves to account as to how we spend the money we collect from the people.”
This move towards centralising revenue collection isn’t without challenges. Oyedele acknowledged that there will be resistance from stakeholders who currently benefit from the existing process. However, he said that the committee’s primary objective is not to wrest away anyone’s rightful earnings but to ensure that government revenue is accurately and effectively collected.
The discussion also delved into the concept of the Treasury Single Account (TSA) initiative. Oyedele deemed it a promising direction towards reform, although its full potential remains untapped. The implementation of the TSA, he noted, could work with the committee’s efforts, but there’s room for further improvement to maximise its impact.
Oyedele added that the committee intends to tackle the issue of excessive bank charges. He lamented the substantial burden placed on businesses, enduring a staggering 65 to 70 levies and taxes. The committee’s visionary strategy involves reducing this number of taxes to a more manageable count of approximately 10.