States must grow IGR to fund budgets – Amosun

… Major tax laws only support revenue generation at federal level – Jigawa finance commissioner

… No state can become more prosperous by over-taxing citizens – KPMG senior partner

Ibikunle Amosun, former governor of Ogun state has urged governments, especially at the sub-national level (States) to shift from funding annual budgets through borrowings but commit to growing internally generated revenue (IGR).

Amosun noted this in Abuja on Tuesday at the ongoing 26th Annual Tax Conference of the Chartered Institute of Taxation of Nigeria (CITN).

Speaking at the conference with the theme, “Sustainable Tax Culture and Economic Roadmap for Nation Building, he noted that developing a strong revenue base at the state levels is more so pertinent at this time of economic challenge when Nigeria and its constituent States and Local Governments are going through very difficult times and finding it hard to provide for its teeming populace.

He said, “The usage of internal and external loans to fund national and sub national budgets come with their attendant costs of high debt servicing, which is now eating up a substantial portion of our revenue.

“The N8.25trillion budgeted for debt servicing is a whopping 30.5 percent of the N27trillion National budget for 2024.

“This is unsustainable and a threat to our economy as a sovereign nation. Something must be done and done quickly to address and reverse this unfortunate trend,” he said.

He explained that with strong determination, the right fiscal and monetary policies and an efficient taxation administration system, governments can grow tax base to bridge the its funding gap in a sustainable manner.

According to him, revenues from taxation offer the most viable way for the national and sub-national government to not only fund their expenditure but to also immune themselves from the shocks emanating from economic volatility beyond their controls.

“The Chartered Institute of Taxation of Nigeria should therefore be at the forefront of the drive to build a formidable tax culture that will not only close up the deep funding hole but also provide the foundation for economic growth.

“Government all over the world have always depended on revenue generation through tax to fund their projects, initiatives, and programmes. A well-designed and progressive tax system is typically the foundation for sustainable public spendings, particularly when it comes to the implementation of large-scale infrastructural development and in meeting social welfare needs of its citizens.

“It is important to state that revenue generation at sub-national levels, particularly at the state and local government level, is vital for fiscal sustainability and development in Nigeria,” Amosun said.

No state can become more prosperous by over-taxing its citizens – KPMG

In his remarks at the tax conference, Adewale Ajayi, senior partner at KPMG said that no state can become more prosperous by over-taxing its citizens.

According to him, only two states and the FCT have overtime been able to generate at least 50 percent of their total revenues, stressing that revenue generation is an issue that must be addressed urgently.

“There is call to increase IGR, there is no sub national that can achieve sustainable growth by increasing taxes. What they can do is close the loop holes in the tax laws in states. In talking about how much a state is generating from IGR, we should be looking at what the state is capable of doing. Not by how much they collected but how much of the tax gap they have reduced.

“As state governments, there is need to understand why people are not paying taxes, that will help assess how effective the tax policies are. Also state governments must look inward, look for the opportunities in the states and not depend on FAAC allocations,” he said.

Jigawa commissioner says major tax laws only support revenue generation at federal level

In her remarks, Hannatu Sabo, commissioner of finance, Jigawa state noted that even though the state is majorly an agrarian state, with citizens fully into subsistence farming, efforts were being made to boost the internally generated revenues in the state.

She decried that the major tax laws only support revenue generation at the federal level while state governments were left with revenues from fines.

“I see the deliberate effort by the federal government on internally generated revenue, and the best you can hear is from Lagos, Ogun and the likes and we hardly say anything but we know the reason, it is because all ports and borders are closed down except for that of Lagos alone.

“In Nigeria, we have several sources of revenues, from oil and allied, and independent revenue which is from taxes and non-tax items.

“I know taxes are for the federation, but there are some forms of tax that should go to the States and this can boost the state IGR.

“Before the advent oil, we were made to know that the main stay of Nigerian economy was agriculture and the major was exports from groundnut. But now our farmers are being left behind”

“If the federal government under the leadership of President Tinubu assists Jigawa states to produce more sesame seeds and hibiscus flower, it will boost export possibilities of Nigeria and would boost IGR for Jigawa state government.”