The Executive Chairman, Federal Inland Revenue Service (FIRS), Mr. Tunde Fowler, has painted a bright future of tax administration in Africa, stating that the continent holds much more revenue generation prospects.
Speaking to Chief Executives of African Tax Authorities at the African Tax Administration Forum and International Monetary Fund (ATAF-IMF) high-level seminar in Cape Town, South Africa over the weekend, Fowler urged African leaders to set their eyes on granting autonomy to their Revenue Authorities as that will strengthen the tax institutions and prime them to generate more revenue for their countries.
Fowler said: “Clearly, Revenue Authorities across Africa have the potential to generate funding for their respective governments and they will perform better if they are: allowed to fully be in charge of their day to day operations and empowered to hire staff, pay competitive salaries and provide regular training for staff”
The FIRS Chairman added that Nigeria’s experience is worthwhile: “The compelling evidence from Nigeria’s experience is that wherever Revenue Authorities have been granted operational, administrative and financial autonomy and allowed to operate with minimal civil service bureaucratic encumbrances, revenue administration has been enhanced and tax collection performance have gone up significantly. Autonomous Revenue Authorities with independent Boards have proven to be beneficial for the actualization of their mandate to generate funding that government require for projects and programmes”, Fowler said.
As a result, Fowler pointed out that tax revenue grew from N1.846 trillion in 2007 when FIRS was granted autonomy to N5.01 trillion in 2012; N4.805 trillion in 2013, N4.746trillion in 2014. In the LIRS too, tax revenue grew from N50 billion in 2007 to 300 billion in 2014.
In the Nigeria’s experience, the falling revenues from Oil in the 1990s, prompted Government to focus more on tax revenue generation, by adopting series of tax reforms initiatives, Fowler added.
He noted that owing to years of neglect due to government’s focus on revenues from Oil, the apparatus of tax administration operated at less than optimal levels.
He also recalled that the Revenue Authority was faced with several challenges such as: operating under the Ministry of Finance with the attendant bureaucratic encumbrances, absence of financial and administrative autonomy, existence of leakages in the revenue collection due to lack of transparency and corrupt practices by tax officials and taxpayers; low staff morale as a result of poor remuneration and poor working conditions of tax officials; prevalence of manual means of tax operations and low usage of Information and Communication Technology (ICT); neglect of tax payer education and absence of quality service delivery and inadequate human resources and skills set as a result of inadequate training.
The FIRS Chairman recalled various Study Groups and Working Groups reports that have shaped tax administration in Nigeria. “The recommendations of the Study and Working Groups culminated in the establishment in 2007 of an autonomous FIRS with its own independent Board, and the promulgation of the Federal Inland Revenue Service (Establishment) Act, No. 13, 2007)”, he said.
It was the second time a tax agency will enjoy autonomy in Nigeria with an Act of Parliament; the first being the enactment of the Lagos State Internal Revenue Service Law in 2006 by the Lagos State House of Assembly.
The FIRS Chief Executive explained that the FIRS, with an oversight by an independent Board, has been able to initiate and implement various revenue collection enhancement projects and programmes such as:
- Tax office modernization – upgrade of existing offices, construction and equipping of new model Tax offices and conducive working environment for Tax officials, a ‘welcoming atmosphere’ for taxpayers as well as operations vehicles to optimise official performance;
- Taxpayer Service education and enlightenment activities – regular use of the mass media to enlighten taxpayers on their rights and obligations , which is aimed at promoting voluntary compliance as a key attribute of a modern and vibrant tax system and effective collaboration with taxpayers;
- VAT Auto-Collect project – recently deployed system, aimed at on-line, real time deduction and remittance of VAT at source from key sectors such as Airlines, Telecommunications and Banking and Financial institutions;
- Integrated Tax Administration System (ITAS) project – aims at automating all core tax administration processes (registration, filing, audit etc.), provision of multiple tax payment channels, such as e-tax pay, Remita, GIFMIS, etc., aimed at making compliance/payment of taxes easier for Taxpayers and for improved revenue collection;
- National Taxpayer Identification Number (TIN) project – in collaboration with States Internal Revenue Services an internet-based system (SIGTAS) has been deployed to register and uniquely identify taxpayers across Nigeria, including the capture of taxpayer biometrics;
- Massive Taxpayers Registration activities – which has led to significant widening of the tax base, with the registration over of 700,000 new corporate taxpayers within the past 12 months;
- i-SHARE Project – a Project initiated to ensure effective communication and collaboration within the Service and with other stakeholders.
- Self-Assessment Project – aimed at assisting taxpayers file tax returns as and when due, calculate their income, expenditure and tax liabilities hence improve taxpayer service and voluntary compliance
The FIRS Chairman saidwhile there is no ‘one size fits all’ way to do this, a good way to start is to put in place the legal and administrative framework to ensure that the Revenue Authority can function with less public service bottlenecks and have access to the resources required to deliver on their mandates for domestic resource mobilization and funding for governments across Africa.
He noted too, that political support from the topmost level by political office holders and general policy direction from the supervisory Ministries of Finance, will be critical to the success of Revenue Authorities.
Head, Communications and SERVICOM Department