Revenue derived from taxes is gradually becoming the new hope for Nigeria since the global drop of oil prices and the urgency to diversify the economy, hence the need to ensure a close tab of agencies at the forefront of tax collection and remittance at both the federal and state levels of government.
It is in the above light that during a recent budget defence session at the floor of the Federal House of Representatives, lawmakers took a turn to express concerns over the dwindling finances of the agency, stating its inability to meet the ₦5 trillion projection proposed in 2020 and rising recurrent expenditure.
The FIRS boss, Mohammed Nami was present to defend the agency while lawmakers continued to raise concerns over the non-oil cost of collection of 4 percent which is accrued to FIRS in 2020 and worth ₦137.411 billion. They also sought to know the rationale behind the proposed 7 percent cost of collection worth ₦298.411 billion for 2021.
Explaining the stand of the FIRS on issues raised, the FIRS Chairman, Nami confirmed that the FIRS realised the sum of ₦4.95 trillion against the ₦5.077 trillion in the revised 2020 budget.
On why the projection wasn’t met, He reiterated that the agency would have done better in 2020 if not for the COVID-19 lockdown and the #EndSARS protest that rocked the country.
However, he revealed that the FIRS also suspended tax audits and investigations for about six months, because the agency couldn’t visit taxpayers nor carry out enforcement activities to recover back debts.
On overhead cost increase
Still taking a deep review of the foregone year, Nami reported that the increase in overhead cost was due to full provision in the 2021 budget for 1,800 staff recruited by the immediate-past management, and that little they added in 2019 and 2020.
Also, according to the FIRS boss, promotional exercises were carried out during the year to deal with promotion arrears in 2019 and 2020, and in so doing, about 5,000 staff members were promoted, which means more cost for them to carter.
He also disclosed that the agency would not be recruiting any staff in the year 2021 as there is not enough accommodation yet even for existing staff in the face COVID-19 social distancing rules, adding that presently, some of the staff are working remotely from home.
According to him, the sum of ₦83.70bn and ₦34.57bn was expended on Personnel and Overhead Costs against the budgeted ₦97.36bn and ₦43.64bn respectively.
His presentation below
“And if you have more staff, surely their salary will go up, taxes that you’re going to pay on their behalf will go up, the National Housing Fund contribution and PENCOM contribution will go up. For those promoted, you have to implement a new salary regime for them. There’s also the issue of inflation and exchange rate differential.
‘’There’s lockdown effect on businesses, implementation directive also for us to study, and research best practices on tax administration which involve traveling to overseas, and we also have to expand and create offices more in rural areas to get closer to the taxpayers; we pay rent for those offices and this could be the reason why all these things went up.”
As a way forward, Nami has revealed that the agency is targeting ₦5.900 trillion revenue for the country in 2021, which represents a 16.22 percent increase above the corresponding year’s budget.
Nami further projected that there will be a marginal reduction in the taxable income of taxpayers due to the effect of the COVID-19 pandemic.
“Out of the proposed total collection of ₦.9tr, Non-Oil and Oil components are expected to contribute ₦4.26tr and ₦1.64tr respectively.
“Consequently, the cost of collection (7% net of 2% NCS VAT) is projected at ₦289.25 billion against the budgeted ₦180.76bn in 2020 to fund the three operational expenditure heads for the year.
“Out of the total collection of ₦.950tr, non-oil and oil components contributed ₦3.435tr and N1.515tr respectively.”