Vice-President Yemi Osinbajo on Wednesday said that without the monthly allocations by the Federation Accounts Allocation Committee (FAAC), it would be difficult for most states of the federation to survive.
Osinbajo stated this while declaring open the 20th Annual Tax Conference of the Chartered Institute of Taxation of Nigeria.
The conference, which is the single largest gathering of tax practitioners in the country, had as its theme ‘Institutionalising tax paying culture in a developing economy’.
The event was attended by the Executive Chairman, Federal Inland Revenue Service, Mr. Babatunde Fowler; the President, CITN, Dr. Cyril Ikemefuna; and other top government officials.
Based on official figures released by the National Bureau of Statistics, the 36 states realised a total of N931.23bn in 2017 as internally generated revenue.
The N931.23bn is an increase of N100bn over the N831.19 recorded in 2016.
Osinbajo said prior to the discovery of oil, many regions in the country generated adequate revenues through taxes from agricultural produce to the extent that they still contributed money to run the central government.
He, however, lamented that with the discovery of oil, such was no longer the case as many of the states now depended on oil revenue from the Federation Account for their operations.
The vice president said that the government was taking practical steps to reduce the country’s over-reliance on oil revenue, adding that this was why Nigeria’s tax system was undergoing various forms of reviews.
Osinbajo lamented the low tax paying culture of Nigerians, adding that at six per cent, the country had one of the lowest tax to Gross Domestic Product ratio in the world.
He stated that as of May 2017, only 14 million out of the country’s 70 million economically active people paid taxes to the government.
According to him, through deliberate strategies to ensure voluntary tax compliance, the FIRS has been able to increase the number of taxpayers from 14 million in May last year to 19 million currently.
Out of the total number of taxpayers in the country, only 943 of them paid self-assessment taxes of N10m and above.
Providing a further breakdown of the 943 taxpayers who paid N10m and above, the VP said 941 of them were resident in Lagos, while the remaining two were residents of Ogun State.
He stated, “From 1966 to date, everyone forgot about taxes; the Federal Government gives everyone an allocation. So, today, the states in the whole Western region, apart from Lagos, do not even earn enough in taxes to pay salaries let alone do any major project.
“Without federal allocations, most states cannot survive. Lagos State alone takes as much IGR as 31 states combined. This tells you how little the other states generate in IGR.”
Osinbajo added that when people pay their taxes, they tend to hold the government to account more for how the country’s resources were being managed.
He said the reason why mismanagement of funds thrived in the past was because oil money was readily available thus, reducing the necessity for people to pay taxes.
According to him, the current administration has put in place measures to check the mismanagement of government resources.