Challenges and strategies for improved Internally Generated Revenue (IGR) at all tiers of government was the major focus of a two-day conference recently held in Lagos.
The event tagged, ‘Challenges and strategies for improved IGR’ had in participation state government officials and private sector operators. It also gave the participants opportunity to understand their rights and responsibilities, especially as regards taxes and value added tax strategies for generating IGR.
Speaking at the event, Executive Chairman, Lagos State Internal Revenue Service, Alausa, Ayo Subair, described IGR as the totality of monetary receipts that government at all levels in Nigeria earns from its statutory activities within its jurisdiction, adding that it includes, but is not limited to taxes, fines, fees, licenses, proceeds of sales, rent, interest and dividends.
Ayo further explained that IGR is a critical and foundational importance to sustainable economic development and growth and added that only very few nations if any in human history, have been able to defy economic influence on their respective socio-political realities.
“As we all know, improvement entails a positive change from status quo and it is difficult if not impossible to improve what you cannot measure. Luckily for us, we have an idea of where we were as at end of December 2018, courtesy of the Joint Tax Board. It is as follows, Federal Inland Revenue and Customs 6,520B; all states’ boards of internal revenue1,176B; all local government agencies 281B (estimated); total 7,977B; GDP127,763B.
“The above translate to tax to GDP ratio of 6.2 percent .The real amount generated by Local Government Authorities is not properly documented and more effort is required to capture this accurately. This will ultimately translate to higher tax to GDP ratio.
“We are all aware that Lagos State has been at the fore front of tax administration reforms in the country through the pioneering efforts of Asiwaju Bola Ahmed Tinubu. Successor governments in the state have followed this visionary path charted by the governor emeritus to close up revenue gaps arising from dwindling and uncertain federal receipts that are still largely dependent on unstable oil prices. It is therefore, not surprising that Lagos accounted for 32.5 percent of total IGR of all states of the federation and FCT in 2018.
“President Muhammadu Buhari in his June 12, 2019 inaugural speech gave us an idea of where we want to be by setting the strategic national goal of lifting 100 million Nigerians out of poverty within the next ten years.
“To lift considerable number of people in any jurisdiction out of poverty, there must be sustained economic growth and development in that jurisdiction. The Bretton Woods Institutions of World Bank and IMF have also asserted through empirical research findings that for sustained economic growth and development to be realised, minimum tax to GDP ratio of 15 percent is required.
“The President in that same speech cited UN report projecting Nigeria’s population to 411 million by 2050. This projection implies doubling of the population within a generation in the next 33 years at an estimated growth rate of 3 percent.
“I guess we can start to anticipate the enormity of the revenue gap that we have to bridge at all levels if we are to achieve the strategic goal set by the President. Minimum modest GDP growth of 5-6 percent may be required whilst IGR drive must start to climb up from the current 6.2 percent to the minimum level of 15 percent”, he added.
While commending the efforts of the organisers of the conference, Okwudili Ijezie & Co Chartered Accountants, he said the event could not have come at a better time.
Earlier in his speech, Managing Partner/CEO, Okwudili Ijezie &Co Chartered Accountants, Blakey Ijezie affirmed that the conference which is the first in its series aimed to expose participants to alternative strategies and initiative that will improve transparency, efficiency and effectiveness of IGR systems.
Ijezie also added that participants would also be equipped with the basic skills for evaluation and appraisal of the existing Revenue Collection Framework and what is happening in other jurisdictions.
He also said that a fresh awareness will be created for participants on legal and institution framework that are essential in effective revenue collection.
Delving into ‘Understanding Internally Generated Revenue’, CEO of Nejeed Consulting Limited, John Nejoh affirmed that there is an arrangement for the central collection and distribution of revenue by all the federating units and that as a result, the revenue generated outside the central collection and distributable sources are held solely by the sub- national entities for their use and classified as IGR.
According to him, the quantum of IGR varies from state to state in Nigeria as it is influenced by the culture, politics and economic setting of the residents of the state.
Enumerating some of the usual IGR sources, he said they include personal income tax, capital gain tax of individuals and business names, stamp duties, pools betting, lotteries, casinos and gambling taxes, road taxes, business premises registration and renewal levy, development levies, naming of street registration fee in state capital, among others.
While admitting that the topic of the conference was timely, he stressed the need for government to be proactive in the development projects by showing that they know how to bring to the grassroots in order to achieve maximum results.
Also, he advised that the anti-corruption institutions and the fight against corruption should be enhanced.
He said: “It is incredible the amount of funds that is lost to corruption according to EFCC and the ICPC reports. The people must continue to hold their representatives accountable. It is only through this that government can live up to their responsibilities by providing public goods and services for all Nigerians.”
A former Ekiti State Commissioner for Finance and Economic Development, Adetunji Adeniyi who spoke on, ‘The real issues in increasing sub-national IGR’, defined funding as crucial for running government, adding that there cannot be expenditure without revenue.
He further stated that the sub-national governments should take revenue mobilisation even more seriously than contract awards.
While stressing the need for creativity and innovation to be employed to encourage tax payment, he called on the state government to build sustainability to their tax system.
On his part, managing partner Patmos Professionals, Mark Anthony Dike who spoke on ‘Challenges and impact of IGR in Nigeria’, observed that the spectre of multiplicity of taxes reared its ugly head in Nigeria around 1995.
This, he explained, was when various taxes and levies were introduced at the state and local government levels at the behest of consultants who took over the functions of the states and Local Government revenue authorities under the name of Accelerated Revenue Generation Programme (ARGP).
To him, the concerted efforts of the Joint Tax Board yielded results in 1997 when the then Head of State directed the Joint Tax Board to work out modalities for streamlining the scourge and submit a report to the Minister of Finance.
The Joint Tax Board, he explained, carried out its assignment and made a number of recommendations to stem the tide.
Highlighting some of the recommendations of the Joint tax board, he said they include, all forms of multiple taxes and levies being charged by the state and local governments should be abolished; genuine receipts of payments of taxes and levies made in one state should be accepted in all other states and local governments across the country; the number of taxes levied on one single tax base such as property or income should be reduced.
Others were- there is no jurisdiction for states to levy property tax or tenement rate as the constitution has vested the power of collecting tenement rates in local governments, more so, as individuals and corporate property owners pay personal income tax to state and Federal Governments, respectively; no levy, tax permit or fees should be charged by state and local governments within the state on the same tax base. For example, tenement rate and property tax should not be collected by the state and local governments on the same property; the use of tax contractors should be discouraged since it is contrary to the provisions of the tax laws; tax consultants may be appointed to assist a tax authority of a state, but such assistance must not be extended to the assessment and collection of taxes, among others.
Ngozi Okpalakunne
