NEWS ANALYSIS: Boosting Internal Revenue Generation in FCT

Understanding the importance of taxation, the International Monetary  Fund (IMF) report on tax policy for  developing countries asked: “Why do we have taxes?

0

The desire of Mr Haruna Abdullahi, the Acting Chairman, Federal Capital Territory Internal Revenue Service(FCT-IRS), is to place FCT first on the national Internally Generated Revenue (IGR) chart.

Unarguably, taxation is one of the most practical and effective ways of generating revenue for national development.

Understanding the importance of taxation, the International Monetary  Fund (IMF) report on tax policy for developing countries asked: “Why do we have taxes?

“Until someone comes up with a better idea, taxation is the only practical means of raising the revenue to finance government spending on the goods and services that most of us demand.”

This assertion gives a complete cogent reason why taxation is so fundamental to development.

No wonder the Nigerian  government directs states to improve their tax net to strengthen the dwindling oil revenue.

There is no doubt that the Federal Capital Territory Internal Revenue Service(FCT-IRS) understands this reality following its recent drive to widen its tax net to make FCT first on the Internally Generated Revenue (IGR) chart.

The service, which commenced operation in 2018 following the  enactment of the FCT-IRS Act 2015, has progressed from tax revenue generation of about N60 billion in 2018 to more than  N100 billion in 2021.

In 2021, the FCT came third on the national IGR chart  after Lagos and Rivers and it is determined to exceed its 2022 target of N200 billion to about N500 billion.

The FCT-IRS Acting Chairman Haruna Abdullahi recently said  that the service was on an aggressive drive to surpass its 2022 target to as much as N500 billion.

He said the service had embarked on various forms of reform ranging from leveraging technology, staff training, enlightenment campaigns and direct engagement in the form of town hall meetings, among others.

“We are hopeful to achieve far beyond our target of N200 billion to as much as N500 billion because as we speak, we have additional people who have come into the tax net significantly.

“Also, through the engagement we are having with the media and the public, we believe people will begin to see payment of taxes as a duty and when that is achieved, N500 billion will be insignificant.

“So, we are putting processes in place and we are simplifying them as well as building internal structure for sustainability.

“We are equally engaged in training and re-training of our  members of staff and hopefully in the next one year, there will be no problem of human capacity gap,” he said.

Abdullahi said that the huge economic activities that take place in the FCT was an added advantage for the service to generate huge income.

Speaking on the use of technology as a formidable tool to achieve its mandate, Abdullahi, said the service had begun to record tremendous success through its adoption.

“As a service, we recognise the importance of IT solutions hence the automation of our taxpayer services, tax management and administrative processes.

“Our progress has been incremental in our quest to achieve a full-blown digital system.

“We have provided a self-service portal for taxpayers to generate Taxpayer Identification Numbers (TIN), validate and verify TIN via USSD, mobile applications, and the web in addition to filing tax returns.

“This has lessened the burden of going to tax offices and has reduced human error and processing timelines.

“The service has fully integrated and adopted the Joint Tax Board (JTB) TIN for all her taxpayers to ensure uniformity of standards.

“Furthermore, to simplify the revenue remittance process, the payment gateway enjoyed by taxpayers is the Remita platform which allows seamless inflow,’’ he said.

On efforts to ensure seamless engagement with taxpayers, Abdullahi  said, “People can visit our website or social media platforms for information on tax returns and other tax matters.

“For instance, our USSD Code for Taxpayer Identification Number (TIN). is *7737*22# which can be verified using a registered phone number, NIN or BVN.

“Also our website is https://fctirs.gov.ng  while the number to dial to lodge tax complaints is 0700 220 0002.

“So, with these avenues among others, people do not need to come to our offices to get their queries responded to.

“We are also opening up other platforms to engage with younger people”.

Speaking at a recent tax seminar tagged: “Reviving the Culture of Filing Tax returns’’, Abdullahi said the service was working toward reviving filing of tax returns in the FCT.

He said filing of tax returns was critical to providing finance for the government to deliver public services that were vital to sustainable development in the FCT.

On efforts being made by the service to check fraudulent practices with regards to revenue compliance, the acting chairman said the unethical conduct of some tax advisors who encourage tax agents to doctor records or refuse to make available documents needed to have a fair assessment of taxes was disturbing.

He said that the service also observed the worrying trend of engagement of unprofessional consultants by taxpayers to prepare and file returns with seemingly very wealthy individuals being encouraged to file as low as N1million to N2 million as annual incomes.

“The service would like to establish a strong enforcement regime to discourage the practice of tax evasion through such ridiculous tax returns filings.

“As the service strives to map out its enforcement strategies for tax evaders, we are not relenting in our efforts in creating an institutional framework for stability to improve collections at this stage of our journey and beyond,’’ he said.

While buttressing Abdullahi’s stance on tax compliance, Mrs Ngozika Jipreze, the Director Legal Services, FCT-IRS, in a paper presentation on  tax enforcement, said non-compliance often undermined government’s ability to generate sufficient revenue for socio-economic development.

She said that the service was set up to ensure compliance, prosecute and recover all outstanding tax liabilities arising from self-assessment, tax audit, tax investigation and demand notices, among others, pursuant to Sections 8, 22,35, 36, 37 of the FCT-IRS Act, 2015.

Speaking on the powers of the FCT-IRS, Jipreze said that Section 8(1)(C) of the FCT-IRS Act empowers the service to “assess account and enforce payment of taxes as may be due to the FCT.”

She  said that enforcement could be carried out on all taxes and levies collectible by the FCT-IRS as provided for in the first schedule of the FCT-IRS Act.

The director said that the service would not fail to work with the Nigeria Police Force, and other law enforcement agencies to ensure tax compliance.

She said that under Section 38 of the Act establishing FCT-IRS, “the service may co-opt the assistance and cooperation of the Department of State Services(DSS) and the Nigeria Security and Civil Defence Corps(NSCDC),among others, to ensure compliance.”

Corroborating FCT-IRS acting chairman’s  remarks at the tax seminar held in Abuja, Mr Mark Dike, a retired Director in charge of Tax Policy and Legislation in the Federal Inland Revenue Service(FIRS) decried Nigeria’s poor tax to Gross Domestic Product(GDP).

Dike, who is also former President of the Chartered Institute of Taxation of Nigeria, said that Nigeria’s tax-to GDP ratio had been in the range of 6 per cent in recent years.

“In comparison, the average for about 30 African countries range from 15.1 per cent in 2010 to 16.5 per cent in 2018.

“World Bank recommends 15 per cent tax to GDP ratio as a key ingredient for economic growth and ultimately poverty reduction,’’ he said.

The News Agency of Nigeria (NAN) reports that the FCT-IRS was established with the enactment of the FCT-IRS Act of 2015.

The service took over the administration of Personal Income Tax from the Federal Inland Revenue Service (FIRS) in January 2018.

It is the only “State” Internal Revenue Service in Nigeria that is established by the National Assembly and it is empowered to administer tax and non-tax revenues accruable to the FCT.

The Service is also responsible for the coordination of collection of all other revenues accruable to the FCT among other things.