The Presidential Committee on Tax Policy and Fiscal Reforms has announced a significant shift in revenue collection procedures within the Nigerian government.
Taiwo Oyedele, the Committee’s Chairman and a former Fiscal Policy Partner and Africa Tax Leader at PriceWaterhouseCoopers (PwC), conveyed this development during an appearance on Channels Television’s Sunrise Daily breakfast programme on Wednesday.
Oyedele disclosed that the Nigeria Customs Service and 62 other Ministries, Departments, and Agencies (MDAs) of the Federal Government will no longer directly collect revenue. Instead, the responsibility for revenue collection for these MDAs will be transferred to the Federal Inland Revenue Service (FIRS).
In explaining the rationale behind this decision, Oyedele highlighted that Nigeria’s revenue collection from taxes is among the lowest globally, while the associated cost of collection remains disproportionately high. He emphasized that many MDAs, which were not originally designed for revenue collection, have been burdened with this task, diverting their focus from their core functions that are essential for economic facilitation.
Oyedele further clarified, “The objective is to enable organizations like Customs to concentrate on trade facilitation and border protection, and regulatory bodies like the Nigerian Communications Commission (NCC) to focus solely on telecommunications regulation. This realignment will enhance efficiency, decrease collection costs, and promote transparency in revenue management.”
He acknowledged that there might be resistance from stakeholders who currently benefit from the existing process, but underscored the committee’s intention to ensure that revenues are directed to the government as intended.
Commenting on the Treasury Single Account (TSA) initiative, Oyedele noted that it is a positive step but still requires further development. He expressed that the TSA will complement the committee’s efforts in optimizing revenue collection, but more actions are necessary to fully exploit its potential.
Oyedele, who was appointed to lead the committee by President Bola Tinubu, emphasized the gravity of Nigeria’s tax gap, which is estimated at around N20 trillion. He pointed out that a significant portion of the elite population evades accurate tax payments, contributing to this substantial gap. Oyedele stated that the committee’s strategy includes bringing previously unaccounted-for revenue into the tax net, with the intention of streamlining existing taxes to foster a more business-friendly environment while increasing overall collection.
The committee chair outlined the overarching objective: “Our plan is to repeal many of the current burdensome taxes, without introducing new ones, and yet achieve greater revenue collection.”
This shift in revenue collection methodology signifies a significant step toward improving Nigeria’s tax system and enhancing its revenue generation capabilities.
Mr Oyedele, I’m afraid has not done his home work well. In the case of Nigeria Customs Service, does he know that 30% of duties are generated through: Wrong HS Code Classification of Goods, Wrong Transaction/Valuation of Goods, Wrong Declaration of Quantity of Goods, etc. How will Oyedele & Co, generate duties of goods caught at borders, transits, Ships and Aircrafts crews, Excise/Manufactured products, etc.
The only truth is that FIRS lacks the nitty gritty or expertise, to dabble into the collection task. They’ll will need to “purse” their current activities to undergo the local and foreign rigorous trainings, to understand the WCO Tariff Valuation of Goods & Services Nomenclatures.
Mr Oyedele’s submission to the president may seem okay septics in theory, but obviously, not in practice because huge revenues will be lost. Trying is believing, and to return to the status quo ante position, when the harm has been done, can be rejected now.
Mr Oyedele & Co don’t grasp what harm they’re luring the government, unfortunately.