Taking a retrospective peep into how the Nigerian economy thrived in 2020, it’s not out of place to conclude that when economic realities went all-time low due to the Covid-19 pandemic outbreak and international crash in the prices of crude oil, the major source of reprieve for the government became the massive revenue from the non-oil sector, championed by taxes remitted from the Federal Inland Revenue Service, FIRS.
The FIRS has no doubt, through tax collection, registered its relevance in the survival of the Nigerian economy. It is on this pedestal that the Senate recently approved a whopping ₦ 216, 646, 579, 231.00 as an operational sum to run its affairs for 2021.
Approving the sum came after resolving a brief back and forth between the agency and the legislative chambers on the need for the FIRS to up its projection from last year’s target of ₦5.076 trillion to ₦7.61 trillion for 2021.
The FIRS pointed out during the back and forth that ensued that the agency was lucky to have superseded last year’s projection despite the Covid-19 pandemic and #EndSARS protest. It urged the lawmakers to thread with caution so they don’t place an unrealistic burden on the agency.
Worthy of note just before its approval, the senators considered the FIRS’ resolve to generate a sum worth 49.90 percent above the 2020 projection.
Senator Solomon Adeola, Chairman Senate Committee on Finance in a breakdown opened that out of the proposed total collection of ₦7.61 trillion is expected from non-oil sources, while ₦1.964 trillion is expected from oil sources.
From the projected expenditure of ₦216.65 billion, ₦107.52 billion will go to personnel cost while ₦47.22 billion for overhead cost; and ₦61.9 billion for capital cost compared to ₦97.36 billion, ₦43.64 billion, and ₦27.80 billion respectively budgeted in 2020.
This year’s projection captures a marginal reduction in the taxable income of taxpayers due to the biting effects of the COVID-19 pandemic.
The FIRS has no budgetary allocation for recruiting this year, rather it aims to seek ways to continuously improve its technology for automated tax collection across all sectors of the economy through e-filing, e-registration, e-payment, etc, all in the agenda of fostering the ease of doing business in the country.
Taxmobile.Online projects that the era of the Finance Act for 2019 and 2020 exempting certain taxpayers from the payment of tax for a window period may impact revenue collection this year.
The Senate’s take
The upper chambers of the National Assembly via its Chairman of Finance Committee, Senator Solomon Adeola in the approval session recently held at the floor of the Senate charged the need to intensify taxpayer education and engagement to improve compliance with tax laws.