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Sunday, 9 August 2015

Taxes can replace oil as source of revenue

by: Sulaimon Olanrewaju 

Revenue from taxes can bridge the shortfall from oil revenue and keep the government afloat if properly handled.
Acting chairman of the Federal Inland Revenue Service, Mr Sunday Ogungbesan, who said this during a chat with journalists at the weekend, said to realise this, the proper structure must be put in place so that every taxable person and organization is captured and made to pay tax.
According to him, “FIRS’ mandate is administered on a tripod of tax policy, legislation and administration. The successful interaction of the three is essential to the success of the FIRS and effective administration of its mandate, which is to meet and surpass government tax revenue targets.”
He added that of the three, only one of the three was within the purview of FIRS, while the other two are beyond its control.
He also called for the centralization of the tax system in the country.
According to him, doing this would make tax collection more effective and would also enhance cooperation with other countries with respect to tax collection.
As he explained, the absence of a centralized system had been robbing both the federal and the state governments of revenue because a number of people who ought to be within the tax net had been left out.
Talking about the achievements of the service, he said it collected a total of N2,374.18 billion as taxes between January and July 2015.
This represents 89 per cent of the N2,667.13 billion target given the service for the period. Ogungbesan said FIRS had been able to achieve this in spite of various challenges it faced in the course of the year.
Some of the challenges he mentioned include “the delay in passage of 2015 budget, which has negatively impacted aggregate consumption in the economy, low level of business activities / local and foreign investment during the campaign and election period and low level of financing of real sector by banks, security challenges in parts of the country, which have a long term negative effect on business activities and tax collection, encroachment by FCT Internal Revenue Service on powers of FIRS, low taxpayer penetration in the informal sector, non-centralization of personal income tax administration in Nigeria with attendant loss of efficiency in collection and lack of comprehensive centralized taxpayer registration database.”
Ogungbesan, who identified multiple taxation as one of the major challenges of tax administration in the country said states, due to the urge to increase internally generated revenue, spew out all sorts of levies and taxes which often result in the same set of people paying the same set of taxes many times over.
He added, “This is a disincentive to tax payers. Multiplicity of taxes discourages tax payers. We need to harmonize these taxes so that each tax payer will be happy to pay.”
Explaining why luxury tax, which the immediate past administration sought to introduce had not taken off, Ogungbesan said the appropriate law had not been put in place, saying the Service would swing into action to collect the tax as soon as the legislature came up with the appropriate legislation.

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