- Good tidings as non-oil revenue proceeds soar
It may well be said that adversity, and not necessity, is the mother of invention or innovativeness as the case may be. This is the story of Nigeria’s tax regime in which non-oil revenue has continued to buck an old, long-standing trend to rise above oil taxes. This is the verdict of the Central Bank of Nigeria (CBN) in its Economic Report for first quarter 2015.
According to the CBN publication, non-oil revenue for the first quarter of 2015 accounts for 61.1 per cent of the total federally collected revenues amounting to about N600 billion. This is against N286.24 billion earned from the petroleum sector tax. This role reversal, so to speak, is quite remarkable considering the fact that this feat had not been achieved for quite a long while.
The fall in oil tax as the CBN reported, is attributable to the sharp fall in oil prices which started since the last quarter of 2014. But as taxes from oil faced south, those from value-added tax, customs and excise duties and company income taxes have seen a sharp rise, according to the CBN. This lends credence to the notion that tax agencies have revved up their operations since the oil price crisis started.
Recently, the Federal Inland Revenue Service (FIRS) has noted that of the nearly N5 trillion revenues target for 2016, about N3.8 trillion would be generated from non-oil taxes like VAT and income taxes.
Diligent collection of taxes is indeed a salutary prospect. That collection has increased drastically without increase in taxes is a sign that there had been less than optimum efficiency in previous tax regimes. While the era of Ifueko Omoigui witnessed a new turn in federal tax management and an exponential jump in the country’s tax proceeds, the current feat only signals the fact that there are still so many more taxable persons outside the tax net.
We urge the current FIRS chairman, Mr. Babatunde Fowler, and his team to raise the game drastically by deploying modern technology, sustainable and reward-base strategies to the job. It has been estimated that less than half of taxable persons and firms are actually paying taxes now.
One of the tried and tested methods of ensuring compliance is the tax authority’s capacity to deter tax evaders through detecting and punishing of culprits. If the citizenry know that the chances of catching and severely punishing tax evaders are high, the tendency to pay willingly would be high. The case of the informal sector requires an especial method and deployment. There may be need to organise them into group as much as possible for ease of compliance and tracking.
As has been suggested by experts, it is unlikely that crude oil prices would return to the old days of boom and bazaar. Therefore, it has become imperative that Nigeria’s taxing regime must be raised to its optimum level in order to earn appropriate revenues there from. Apart from direct and indirect taxes, government must aggressively pursue numerous other revenue streams available to it. Many government agencies and parastatals that are revenue-yielding have not been explored to their maximum capacities for optimum returns.
Above all, agriculture and manufacturing are keys to the sustenance of any modern, developed country. Government must methodically revive the agriculture sector with a strong bias for agro-processing for export. While the majority may cultivate for food, government must intervene in large scale mechanised production of export products through public, private partnerships.
Such important cash crops like cocoa, cotton, cashew nuts, rubber, palm oil, groundnut, shea butter and forest products have either not been exploited or left in limbo over the years.
It is indeed good news that our non-oil revenues collection machineries are being better geared and already yielding positive results. As they say, adversity too has its good ends
