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How Nasarawa State Internal Revenue Service is making progress despite challenges, by NSIRS Chairman

How Nasarawa State Internal Revenue Service is making progress despite challenges, by NSIRS Chairman

Ahmed Yakubu Mohammed, chairman, Nasarawa State Internal Revenue Service, in this interview with Solomon Attah gave an overview of the activities of the Board since he took over the leadership in 2018. He spoke on the introduction of Central Billing and Tax Administration System, Harmonised Revenue Law 2020, the autonomy of the board and the full automation of the processes of revenue collections, saying that they did not only block leakages and loopholes in the system, but have reduced chances of human interference, and have also saved government from losing funds. Mohammed said the board got the mandate of Governor Abdullahi Sule to generate monthly N3billion into the coffers of the state, and that Karu axis alone has the ability and capacity to generate the said targeted amount monthly. Excerpts:

As the team lead, driving the revenue base of the state. Can you share an overview of the revenue service?

First of all, let me start with how we came in first. We came into office in March 15, 2018, for a term of 4-years. I remembered, as at that time, the executive Governor then, Senator Umaru Tanko Al-Makura, before my appointment, he sent for me to come while I was in Abuja working. He told me that he was going to appoint me as the Chairman, Board of Internal Revenue, that he was going to give me time to think about it. I said, okay! No problem because he took me unawares. So, the first thing I did when I left the Government House as at that time in 2018, I brought out my phone to go to the website of the board of internal revenue to see the overview of how the organisation is. And behold, when I did that, I realised they didn’t have a website as at that time. Even before I came in, I observed problem No.1 and I never told anybody. When you search for Nasarawa State Board of Internal Revenue Service, you would not see anything. It took me to Kano State Board of Internal Revenue Service Office in Nasarawa in Kano. You know there is Nasarawa in Kano, so they have an office there. So, I became worried and said, how can an office like this not have a website? Then, I knew some people there and I then called one of the officers to ask, do you have a website? I thought probably I was not doing the right thing, and he told me no! They don’t have. That was when I confirmed my worries and said, that is problem No.1 that needs to be solved. So, when I came into office, I realised that they are not fully automated, because most of the collections are done manually and if you do that, you know definitely there are going to be leakages. At this point, we needed to spread our tentacles and set-up a website. That was one of our priorities so that we could reach out to people out there. I remembered people from Lagos that wanted to make payment to Nasarawa State, they have to be making phone calls. They will call somebody they know from Nasarawa State and say, please, can you link us up to Nasarawa State Board of Internal Revenue Service, we want to make payment. They didn’t have any way they could link to Nasarawa. So, we setup a website and we linked payment platforms to the website, so that anywhere in the world you can make your payment.

Secondly, when we came into office, as at the time we took over, the monthly revenue generated for the state was hovering between Three to Five Hundred Million Naira on a monthly basis. I remembered when we were sworn in, the former governor gave us a mandate that, I am going to give you a target of One Billion Naira monthly. I remembered what I was saying that time, I told the governor, it was not something that we could not meet and we promised we are going to do that. We came into the place and decided to look at what was on ground. We saw that the processes were not fully automated, that was first; secondly, there was no strong law backing revenue collection in the state and thirdly the office didn’t have autonomy of its own. But the most important thing we concentrated on then was to automate the processes, reduce human interference and concentrate on collection of revenue. We started doing that, blocking loopholes and leakages and thankfully, we were able to hit the target of One Billion Naira monthly collection.

When Engr. Abdullahi Sule came into office as governor of the state in 2019, we decided to design what is now called ‘The Nasarawa State Central Billing System’. It is a platform we introduced whereby all payments from Nasarawa State, whether it is for hospital, school, tax or whatever will go through that platform. You raise invoices, make payment through the platform, and is something that we can easily go on a computer system to monitor any payment from MDAs, whether it is DASH, Nasarawa State University, State Polytechnic or College of Education in Akwanga or NUDB or NAGIS or any of the MDAs, you just go into the platform and see what they are doing. That was why we introduced that platform for the Central Billing System. Engr. Abdullahi Sule gave us the mandate and we did that. With that, we have to start the process of training all the MDAs on how to use the platform. They were able to use the platform, you raise invoice and payment electronically and swiping of phones are also done electronically. Gradually, when we started doing that, and we started seeing results of what we were doing. As at today, we are generating up to N1.7 billion monthly. So, you can see the progression which we have been able to make. This has really helped us.

So, there are three key things you have to do in terms of revenue generation, if you want to succeed. One, you automate your processes, Two, have a very strong law, which is the harmonised law, then thirdly the autonomy of the board, which is very important. I have spoken on the issue of automating our processes, whereby we ensure every payment and swiping of phones are done electronically, you reduce human interference, then you block leakages, because as long you have human interference in terms of revenue generation and collection most importantly, then there will be pilfering, people will deep their hands into those funds, but when it is done electronically, you cannot go and pick funds there. But if it’s done manually, once the cash is collected, then there is a problem, it gets missing along the way. We did that and we decided to get approval from His Excellency to ban the use of manual receipts. Initially, when we first came in, the Ministry of Finance and the Office of the Accountant General were printing receipt for MDAs and you know in filling receipts, you can collect any sum of money and write a different figure on that receipt. Only God knows, but with the system that we have, the CBS, you cannot generate invoice. Now, let assume you generate invoice for N2,000 and you go to the bank and pay N200 thinking that the system will no detect. The CBS will read N200 because at any time the system, if you go back ward since 2019 since we started that, I can bring out information for you from the system. It will give state, time, reference no, ID of that figure and it will tell you so, so person paid N200. So, you see, that is the importance of doing that, it saves government from losing funds. I cannot say we are 100% on that; we are still on the process of doing that well. That is on the part of automation.

On the other part, we now decided to introduce the Nasarawa State Revenue Harmonisation Law 2020. The essence of that law is to organise and ensure we reduce multiplicity of taxes, especially between the state and the local governments. We had been having running battle with the local governments prior to that law, because you raise demand notice for the state and give to a taxpayer and the local governments will do theirs separately and at the end of the day, you will see a taxpayer with different demand notice. There were several complaints coming from the taxpayers. What we did is, we sat with the local governments, went round, did public hearing and discuss with them that, it is important we do a law whereby the local governments, though an entity of their own, an arm of government of its own, they have the right to generate their own revenue, because if you go to the 1999 constitution, as amended, you will see the functions of the local government there. The functions clearly state out the revenue heads of the local government. There are twenty of them there, so the constitution gave the powers to do so. But, if you also go to the second schedule of the constitution, section 9 there, you will see where it says, the State House of Assembly has the right to do laws to give the rates for whatever revenue for the local government. We use that as a basis and sat with the local governments in the state; we want you to transfer those powers of yours to the state, we will not do the process of collection on your behalf for a fee, which is called the cost of collection. In the state, we collect on behalf of the local governments, then remit them what is supposed to be given. So, our cost of collection will now be on the 70/30 basis. 70% goes to them, 30% goes to the state government for doing that for them, so that we reduce all this multiplicity of taxes, whereby you raise demand notice left right and centre. Though we are not 100% perfect in that, we are doing our best, but nevertheless we are still having some small areas whereby the local governments are still doing that. That is that on the part of the law and it was passed in 2020 and it was signed it into law on the 31st December, 2023 after an amendment of the law.

We just recently amended the law because we realised the first one that was signed in 2020, there were some anomalies. We had lacuna in some areas, though it might be typographical errors, because there were some rates that were supposed to be N50,000, we realised it was written N5000, so the state was losing, like in the Ministries of Health, Education, some mistakes were made, so we had to take it back to the Assembly for corrections of those anomalies and it was recently signed by His Excellency. That is on the part of the harmonisation law. The third part is the autonomy of the board. The revenue authority, if you want it to operate well and to ensure that it does its job, then it has to work unhindered without interference, because if you interfere with the work of the board, then you will not get result. There are several states, if you look at Lagos now, we did an analysis of states that have autonomy and states that do not have, that is the tax authority that does not have autonomy in Nigeria. From this statistical analysis that was done, even the joint tax board did that, we realised that, all the top states that are generating more revenue are autonomous, then those ones that are not generating more are those states that still don’t have autonomy. We brought this issue to His Excellency and he gave approval and was also captured in the law that we have. We now have our full autonomy both financial and administrative. It also helps us in working unhindered, without being under any Ministry, because initially, we were under the Ministry of Finance, Budget and Planning. There are so many things you want to do, it has to go through the Ministry, before it goes to the governor; so, it takes a very lengthy period and our work is not the type of work that you have to wait this long to do. There are certain things that need immediate action. We were able to get that and we are now autonomous.

Have you had any new target in recent times from the governor?

His Excellency has really done a lot for us in terms of approvals and so on. He has set a new target for us now, to generate N3 billion monthly. That is where we are heading to now and inshallah, that is what we intend to do. All that I told you can be said to be brief synopsis of what we have been able to do since we came into office.

From the collection of the taxes, what do you do, or where do you channel the monies into?

Let me give you an example of what we intend to do. There were several revenue heads we have, apart from the one from the board of internal revenue. There are other MDAs that have their own revenue heads. There are revenue heads that were not even being collected before we came to the office, like the Pools, Betting and Casino. All these people doing this Naija Bet and all that. When we came in, they were not collecting it in Nasarawa State. We have to introduce it, and did an Executive Order to that effect, because it was not even in our law. We have to do a law to back it to even collect it. We quickly do a law and the former governor, Senator Umaru Tanko Al-Makura signed it and we started collecting revenue in that area. That is one. Property tax was not being collected in Nasarawa when we came. Is a huge area where the state can generate billions of naira. There is also what is called the withholding tax on rent. That one, every person that is renting a property or a house anywhere and whatever you pay as rent, 10% is supposed to come to government as withholding tax. We also introduced that. All these things were not being collected before. And one cash cow now is the property tax because that is being calculated based on the size of the property and we have several properties. If you go to Karu now, Karu is our cash cow. Karu alone has the ability and capability to even generate that N3billion monthly target the governor has set for us, if properly harnessed. But unfortunately, we have so many challenges in Karu that we will not be able to overcome. One of the challenges is that, even when we introduced this property tax, the locals in Karu under the umbrella of the Natives of Karu, had a press conference complaining how the Board of Internal Revenue introduced one obnoxious law that they did not know about, called ‘the property tax’, that we are disturbing them and they are calling on the governor to call the board of internal revenue to order. When the governor called, and said, the people in Karu sent this letter to him. I explained to His Excellency that this is the revenue head that is captured in the law, is not something that is alien. It is done everywhere in the world, even in Nigeria, all the states are doing it. Just because we have not been doing it in Nasarawa State does not mean we will not do it. The thing is, people don’t usually like to pay tax. There are two things that are certain in life. Is Payment of taxes and death. We did that and we overcame. Even the one that we just introduced, the pools, betting and casino, we had a running battle with people doing these businesses around. You come with this, they go round the other way, trying to see how they can manipulate their way, but we stood firm and thankfully, we are already getting our acts together, and the government is making quite a lot. We are now finalising the area whereby we will now link all those doing the businesses in Nasarawa State to a platform, so that anybody that does any betting and wins, automatically, we will also get an SMS alerting us that, so, so person has done business and has won. It is called ‘bet won’, that is also taxable. That is the final part we are doing now, because we are partnering the Nigeria Lottery Commission, where all the betting companies, like the Naija Bet are already automated and what we do is to share APS and link up with them so that any betting anybody does and wins from Nasarawa State, we will get an SMS alert. So, that is the final part we are doing collections in that area. So, the withholding tax on rent is one of the areas we are having a bit difficulties now because of lack of cooperation from both the owners of the properties and also the tenants, because for every building now, if you go round, trying to get information, people don’t like to give out information to us on that, we are still working on that and we are sure, we will make headway. So, these are the things we are doing and, there are other areas we are also looking at.

May we know such areas?

One area that we have not really done well is the informal sector. If you look at Nasarawa State, even in the Karu area and Lafia, most of the businesses people know are in the informal sector. And the Informal sector is the very difficult terrain in that even a seasoned tax administrator finds it difficult to operate in that terrain because of the type of people you meet there. Their level to comprehend issues, their level of education, because most of them are on the lower cadre, but is an area whereby even if it is kobo-kobo you are getting, it turns out into millions and billions. So, these are areas we are working on to see that we automate the process for those in the informal sector, so that government can get what it can; so that the state will not depend on what comes in from the Federation Account. These are in brief what we’ve been doing since we came on board.

What are the challenges you are facing with the CBS and other digital channels you have in operation in collecting tax?

One of the challenges we have faced with the CBS is that, you know as a platform, definitely you will have people trying to hack into your system. What we have been able to do, because I remember on the CBS, if you now raise an invoice and you print a receipt, it gives you the figure that was paid electronically on the CBS. I am going to give you a clear example. We are even prosecuting somebody in the court now. A woman made payment of N500,000.00 to one of our vendors that was doing the process in the court. They went to bank and made a payment of N50,000.00 and now went to a PoS centre, design the receipt just like ours even with the QR code for the woman and now did a receipt for N500,000.00 and gave to the woman. When she went to our office in Karu and was trying to process her documents, and thankfully, what we told our officers is that, if you see a receipt, go down to the back end of the system and check. Our zonal officer in Karu went to back end and checked the invoice number on the receipt and he saw that the payment was N50,000.00 on the system while she had a receipt of N500,000.00. He asked her and said, Madam the evidence we have here is that you paid N50,000.00 but what I am seeing on your receipt here is N500,000.00. she said, she paid N500,000.00. That issue was brought to us and we did investigation and we found out that, one of the officers that we engaged are the one trying to cut corners. And we had instances whereby people have tried to hack into our system. So, that is why we do continuous upgrade on our system to ensure they don’t get access to our system. Even the receipts, we change the colour anytime without notice. On the other part again, the issue of sharing APIS with other technical partners that we’ve engaged. So far, what we have done is that, all the consultants we have engaged, we always encourage them to automate their process so that we can link up with them, so that even their payments can be done electronically.

With the boost in the revenue of the state. What do you think you can do differently from what you have been doing?

Thank you very much. Let me quote one of my idols, when I was in secondary school. He is called Albert Astyn, one of the greatest scientists we’ve had in this world. The man who designed the law of relativity. He said, when you continue to do one thing and you continue to be repeating that thing in the same time, then you will not make progress. If you do it the first time and you make progress and you repeat it the second time thinking you will continue to make progress, it will work out. So, change is very important. When you adopt a model now and you succeed, it has a timeline of wear and tear, because there are different models for different times and different occasions. If I adopt this model now, I believe in change most of the time that we do our things, so that you try this model. Often time, you probably might not succeed. I don’t believe in quitting early. I remembered something that happened here, when we first introduced the central billing system in 2019, all my colleagues here: my board members and even the directors, because by the time we started introducing the new system, our revenue dropped. They all got scared, from what we were generating before, the N500 million that was said to be gotten, dropped to N300 million. They now said, ‘kai! Chairman! This thing is affecting our system ooooo.’ The revenue is dropping, how are we going to do about it? I said, don’t worry, do you know why? Is because is a new system and people are not used to it. I will not go back on this thing. Let’s go ahead. Even if it is going to take us months, that we it will pick up. I remembered one of our board members walked up to me and said, Chairman! Walahi let’s leave this thing. I said no! I will not. It got to a point that I was the only one in support of that platform, the CBS. All of them were skeptical about it, but by the time it picked up, everybody got used to it in the MDAs and they said, chairman you have wisdom. I said thank you very much. I don’t want to introduce something and I start seeing results, I prefer to face challenges, I know that at the end of the day we will have something to celebrate.