- Federal Government should pursue the 1,000 dormant revenue lines instead of raising VAT
Minister of Finance, Mrs. Kemi Adeosun, may well be the most up and doing among the current cabinet members. Perhaps given the nature of her portfolio and current economic situation which has been described as being in technical recession, she is daily in the news.
Recently, in one of such rounds of brainstorming over Nigeria’s economy, she had noted that the Federal Government has identified 1,000 dormant revenue lines. It was at a two-day National Revenue Retreat in Kano. Perhaps not to be outdone, her host, the state governor, Alhaji Abdullahi Umar Ganduje informed the audience that even his state had also identified about 106 dormant revenue lines which it was working assiduously to activate.
Giving perspectives to her assertion, the minister said the days were gone when revenue-generating government agencies acted as if they were autonomous entities outside of budget. She noted that whether the funds were from fees, fines, taxes or projects, the law was clear that every naira must be paid into the Consolidated Revenue Fund.
She says: “The first step required is the preparation of a detailed revenue map which identifies the specific lines of revenues and understands how such revenues are generated. Disaggregating revenues into line items is an important first step… To maximise revenue collection the task of plugging leakages must be undertaken. It is also important to understand the costs of collection; that is, the essential equipment, technology, and resources that are required to support revenue.”
By the foregoing, it can be adduced that the minister is focusing her mind on the numerous revenue-generating departments and agencies of the Federal Government as the untapped revenue lines. She is spot on. Hundreds of Federal Government establishments do not only generate revenues, they have the potentials to yield much more than they currently do and declare.
But the situation till date is that most of them, instead of yielding revenues, actually draw subventions. They hardly render accounts but merely write off most revenues generated as cost of operation. The result is that huge revenues from agencies of government end up in the pockets of public officials charged with running such agencies.
This has been the troubling narrative of Nigeria’s government business while the oil boom lasted for about four decades. Now that the crude oil bubble has burst and Nigeria is said to have lost about 70 per cent of revenues accruing from crude oil sales in the last two years, it is time to take another look at all the possible revenue lines available to government in order to resuscitate them.
It is interesting to note that while the finance minister canvassed a return to the basics in order to capture all loose revenues of government, another agency, the Revenue Mobilization Allocation and Fiscal Commission (RMAFC) is calling for the raising the Value-Added Tax (VAT). RMAFC wants the rate to be raised from current five per cent to between 7.5 to 10 per cent.
What is remarkable however, is that the reasons given by the chairman of the commission, Mr. Shettima Gana, for raising this consumption tax is simply because it is higher in other countries and that it would help government increase her revenue base.
As we have stated in the past, we condemn what we consider a lazy approach to revenue mobilisation that is devoid of creativity and purpose. No serious government would contemplate raising taxes of any kind at a period like this when inflation is closer to 20 per cent, wages are low and irregular and jobs are vanishing daily. It would amount to sheer insensitivity to burden the populace with even more tax at this time.
We tend to agree with the postulations of the finance minister. Governments across the board are not collecting current taxes and revenues efficiently enough. There is still a lack of fiscal discipline while treasuries leak like sieve. Ministries, departments and agencies (MDAs) are yet accountable. For instance, revenue-yielding agencies must be subjected to rendering publicly, annual accounts.
Quick-fingered public officials have recently been found to lift huge cash from the treasuries because of current weak accounting regiment. Now that we no longer earn cheap dollars from crude oil
