With a cash haul of N4.03trn in the 2017 fiscal period, the Federal Inland Revenue Service (FIRS) can afford to roll out the drums over its achievement. Although short of the year’s target of N4.89trn target by 17.62 percent, the performance came to an impressive leap of 20 percent (by N720bn) over the 2016 collection of N3.3trn. Equally remarkable is that taxes from non-oil sources accounted for 63 per cent, while oil tax accounted for 38 per cent of the total collection. Stamp Duty is said to have recorded the most increase in performance with 94 per cent during the past year. Taken together with the Nigerian Customs Service revenue collection of N1.012 trn – said to be the highest ever – coming at a time of economic recession, Nigerians ought to, finally, be able to appreciate the vast but untapped potentials of the nation’s revenue sources.
FIRS has of course come a long way from 2004 when Ifueko Omoigui-Okauru held sway as its executive chair. From less than N1.2trn at her coming in 2004, we saw how the leadership under her not only grew the agency’s revenue to over N5 trn when she exited in 2012 but undertook far-reaching reforms to ensure that tax administration as a whole was put on a robust foundation. Nothing attests to the efficacy of those pioneering initiatives than the steady growth trajectory being recorded nearly six years after her exit.
In like manner, the current management of FIRS deserves commendation for revving up the momentum. The issue however is that FIRS still has a long way to go. First, with the tax to GDP ratio at a scandalous six per cent, one of the lowest in the world, Nigeria can be most accurately described as a country running on rent. Whereas the myth has endured that most Nigerians are probably too poor to pay tax, it is instructive to note that the tax to GDP ratio of our next door neighbour Benin Republic is 15.4 percent; ditto Ghana 20.8 percent and Gambia 18.9 percent. For South Africa, it is 26.9 percent and Egypt 15.8 percent. That an economy touted as the biggest on the continent barely rakes in an average of 30 percent of what those far less endowed countries are doing in tax ratio terms shows how far its citizens are from accepting the tax obligation as a civic responsibility.
Things have just got to change. Change in terms of efficiency in collection and in the deployment of modern technology to cast the tax net as wide as possible. It should come with a mechanism to ensure that the cost of tax evasion is made prohibitive and steep, whether it is a company or an individual that is involved. It should cascade to states most of whose boards of inland revenue merely exemplify the lethargy, indolence and the corruption of their larger bureaucracies.
Having endured serial cyclic volatility in oil prices and its attenuating shocks, the sheer folly of setting out on the path of development planning on a commodity whose prices are as indeterminate as they are unstable ought to be obvious by now. With its many correlates in the scores of abandoned projects waiting endlessly for budgetary intervention, in bloated bureaucracies and the humongous costs of running them, and in the industrial crises they have spawned almost uniformly across the states of the federation, the least expected of those charged with tax administration is to help fast-track the process of charting that alternative path which puts taxation – as opposed to natural resources – firmly in the saddle.
And so for FIRS, the charge should be – never again will recovery in oil price either threaten or derail the steady push to put taxation in the saddle of our public finance system.