Presidency queries Fowler over drop in revenue collection

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Presidency has queried the Chairman of the Federal Inland Revenue Services (FIRS), Babatunde Fowler over poor revenue collection and remittance.

The query is coming as a shocker to the agency that boasted of netting the highest revenue of N5.32 trillion in 2018 after it takes in N5.07 trillion in 2012.

The query dated August 8 and signed by President Muhammadu Buhari’s Chief of Staff, Abba Kyari, gave Fowler, a close ally of the All Progressives Congress (APC), Bola Tinubu up till Monday, August 19, 2019 to respond.

The query, titled; “RE: Budgeted FIRS Collections and actual collections” centred on poor revenue collections between 2015 and 2018.

It reads: “Your attached letter (FIRS/EC/ECW/0249/19/027 dated 26 July 2019) on the above subject matter refers.

“We observed significant variances between the budgeted collections and actual collections for the period 2015 to 2018. Accordingly, you are kindly invited to submit a comprehensive variance analysis explaining the reasons for the variances between budgeted and actual collections for each main tax item for each of the years 2015 to 2018.

“Further more, we observed that the actual collections for the period 2015 to 2017 were significantly lower worse than what was collected between 2012 and 2014. Accordingly, you are kindly to explain the reason for the poor collections.

“You are kindly invited to respond by 19 August 2019.”

Recall that the FIRS earlier in the year claimed it collected N5.32 trillion in 2018, describing it the highest revenue receipt since 2012 when it realised N5.07 trillion.

The agency went ahead to declare that it was targeting N8 trillion revenue target for this year.

The N5.3 trillion revenue for last year was seen as significant particularly at a period when oil prices averaged $70 per barrel.

Oil price average of $100 to $120 per barrel between 2010 and 2013- but tax receipts fell below the 2018 estimates.

The non-oil component of the N5.320 trillion was N2.467 trillion representing 53.62 per cent of the total collection, while the oil component was estimated at N2.852 trillion or 46.38 per cent.

FIRS said it collected N212,792 billion in audit from 2,278 cases with a huge reduction in audit circle.

Fowler said: “While we have been steadily increasing revenue collection over the years, our cost of collection has actually been going down. In 2016, we collected N3,307 trillion, in 2017 we collected N4,027 trillion and in 2018 we collected N5,320 trillion.

“Meanwhile, the cost of collection as a percentage of actual taxes collected has been reducing; in 2016 it was 2.6 per cent, in 2017 it was 2.49 per cent, while in 2018 it was 2.14 per cent.”

He added: “The service has been making tremendous efforts in also increasing the amount of non-oil revenue it collects. Non-oil collection has contributed 64.99 per cent in 2016, in 2017 it contributed 62.25 per cent and in 2018 it contributed 53.62 per cent. This represents the government’s focus on increasing non-oil sources of revenue and the diversification of the Nigerian economy.”

The FIRS boss further maintained that companies, which declare profits, were obliged to pay taxes in the interest of all Nigerians.

He reeled out various initiatives being implemented to enhance tax administration and make taxation as easy as possible.

“Taxpayers can now also choose the tax office where they would like to conduct their tax transactions. Before now, if one was registered with a particular tax office, one had to conduct all of their tax transactions in that office. However, to make it more convenient for the taxpayer, they can now choose whichever office they wish to conduct their transactions with.

“We are automating the collection of Value Added Tax (VAT) in key sectors which will facilitate reduction in compliance cost in the long term. We are doing system to system integration between banks and FIRS. And I am happy to announce to you that we had a 31% increase year on year in VAT collection in the banks that have gone live between Jan 2017- Dec 2018 and collected 25bn so far,” he noted.

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