Fowler, FIRS and more cash for Fed Govt

Since assuming office in 2015 as Executive Chairman of the Federal Inland Revenue Service (FIRS), Babatunde Fowler has elevated the Service to a level higher than his predecessors in terms of performance, writes Assistant Editor Nduka Chiejina.

Babatunde Fowler was appointed Executive Chairman of the Federal Inland Revenue Service (FIRS) to replicate what he did in growing the tax net in Lagos at the federal level.

Since he assumed office, Fowler has introduced innovative tax ideas designed to make non-oil revenue a veritable alternative revenue source that will challenge revenue from oil as a major revenue source to the nation’s purse.

Appointed in 2015 to head the FIRS, Fowler has transformed the operations and elevated the performance of the FIRS with a series of proactive initiatives that have resulted in a robust tax administration.

These initiatives include automation/ICT deployment for the Service’s processes, tax education for members of the public and sustained growth of total tax revenue collected, and ICT deployment for transparent and easy collection of taxes.

The automation of all tax processes has given birth to e-Solutions, for transparent, convenient and faster tax administration. Under the e-Solutions, the initiative is the e-Receipt system which is generated once payment is received from a taxpayer with a notification sent to his/her e-mail or phone number instructing the taxpayer to download their receipts and print them out for the record.

Still, under the e-Solutions initiative, taxpayers can access their Tax Clearance Certificate by applying for the certificate online and same is received online immediately. The FIRS has continued to build on other aspects of the e-payment channels, to make it easy to pay taxes anywhere in the world, real time-all time (24/7) and also download receipts any time and from wherever a taxpayer wants desires.

Another feather to Fowler’s cap is his handling of the Value Added Tax (VAT) component of the Tax system and administration. The FIRS’ automation programme has reflected positively on VAT collection occasioned by the information exchange with third-party databases and other government agencies.

Under Fowler, the auto VAT Collection has shown a 31% VAT increase over the N25billion collected in 2017 through the new scheme. In terms of the automated deductions at source and remittance of VAT and Withholding Tax from state governments, the FIRS was able to collect N13 billion. During the year, the use of ICT and automation has facilitated the growth of taxpayers who have used these facilities from 9,574 to 59,350.

In administering stamp duties remittances, the FIRS imported a hundred new Stamp Duty machines to be placed in every state of the federation. The electronic Stamp Duty process has grown the Stamp Duty revenue and made it more convenient for taxpayers. In 2016, the FIRS collected N5.6 billion; in 2017, N10.9 billion and in 2018, N15.66 billion.

The Service made it more convenient, with the use of technology, for taxpayers to choose where their tax files reside. Now, as a taxpayer, you can choose the tax location. If a taxpayer is in Kano, for example, and for whatever reason, he/she wants the tax file to reside in Lagos, it is allowed. The FIRS has also deployed systems to all its stations. Taxpayers, unsure of how the systems work are shown how to use it to make their payments or file their returns.

Under the tax education/enlightenment and robust enforcement initiative, the FIRS under Fowler has the Federal Engagement and Enlightenment Tax Teams (FEETT) directorate, which continuously interacts with taxpayers to help them file and register as taxpayers,  provide answers to any questions they may have in terms of ease of payment of tax.

With regards to greater revenue generation, Fowler has marshalled the FIRS to consistently grow tax revenue under his watch. In 2018, the FIRS collected a total of N5.32 trillion, considered to be the largest ever collected by the Service. In 2017, the FIRS collected N4.02 trillion and in 2016,  N3.3 trillion.

Despite these impressive tax revenue collection efforts, the FIRS which collects 4% as the cost of collection only from non-oil revenue has progressively recorded a gradual slide in its cost of collection. In 2016, it was 2.6 per cent; 2017, 2.49 per cent and 2018, 2.14 per cent, the reason for the downward slide in the amount that goes to the FIRS as cost of collection is the deployment of technology which has resulted in a more efficient tax collection process.

Since 2015, the focus has been on non-oil revenue. Non-oil revenue from tax collection in 2016 was N2.149 trillion; in 2017, N2.5 trillion and in 2018, N2.852 trillion. In percentage terms, 2016, non-oil tax revenue accounted for 65 per cent; 2017, 62.25 per cent and 2018, 53.62 per cent. What this means is that non-oil tax revenue has been growing in absolute terms. Non-oil tax revenue has performed well in excess of oil tax revenue, suggesting that the effect of the diversification of the Nigerian economy by the Federal Government has gained traction.

In the area of VAT performance, in 2018, the FIRS crossed the N1 trillion mark. Prior to that, in 2016, the FIRS collected N828 billion as VAT; in 2017, N972 billion and in 2018, N1.1 trillion. 85% of VAT is distributed to state governments and local governments every month.

Another approach employed by the government but anchored by the FIRS to make taxpayers comply with the civic duty of paying tax without the use of force and to make tax payment as painless as possible, the government with the Ministry of Finance launched the VAIDS (Voluntary Assets Income Declaration Scheme) programme.

In 2016, the FIRS on its own gave a tax amnesty, which saw N92.6 billion was declared as unpaid taxes. In 2017, the VAIDS programme was also launched. Under VAIDS, N92 billion was also declared in unpaid taxes. In terms of the audit process, the FIRS generated N12 billion from under-remitted tax payments.

Another initiative introduced saw the FIRS looking at businesses/ partnerships that had banking turnover in excess of N1 billion. Under this, the FIRS found that about 6, 000 of them do not have a tax ID, did not file returns and did not make any payments.  Businesses in that category have paid N21.75 billion and are also paying the balance in instalments. The initiative also saw the FIRS looking at businesses/partnerships with a banking turnover between N100 million and N999 million.

The Service reviewed this group category of businesses through commercial banks. So far, there are 45,361 that have TIN and are making payments. There are also 40,611 that have TIN but have made no tax payment and 44,504 that have no TIN and therefore have made no payments.

The FIRS similarly has another special project through which corporate organisations that own companies or properties were not found within the tax net in 2017. Through this, it generated N1.33 billion in 2017 and N2.88 billion in 2018 in just Lagos and the Federal Capital Territory. This is an exercise is expected to cover the whole of the country to ensure more taxpayers are brought into the tax net.

Last week, there were media reports, which alleged that taxpayers’ money in the custody of the FIRS is missing.  It was reported that some officers of the FIRS explored irregularities in the Service’s accounting system on Duty Tour Allowance (DTA) to collect claims that they are not due for.

However, a statement issued by the FIRS on Wednesday noted that “on the DTA (Duty Tour Allowance), it claimed that some staff applied for and were granted, allowances to travel for official trips. Some are alleged not to have travelled for the number of days, for which they were slated. The EFCC is looking into that. Sometimes, it is good to have a third party investigate matters like this instead of having a staff investigate another staff. Investigation by a third party is more objective. FIRS has since taken steps to remediate this. The EFCC will soon complete its investigation. Anybody found guilty will be dealt with through our administrative process.”

The issue at stake in this inquiry are operational/travel funds within our expenditure budget, Fowler said.

Speaking further on how the FIRS operates, Mr. Tunde Fowler explained that “taxes collected by the Service are not paid into the coffers of the Service. Rather, all taxes, are PAID DIRECTLY INTO THE FEDERATION ACCOUNT, electronically, through the Central Bank of Nigeria (CBN).”

The FIRS he said “does not have access to taxpayers money. Its operations are funded by appropriation of the National Assembly, through monthly remittances by the Federation Accounts Allocation Committee, (FAAC).

Fowler affirmed that no taxpayers’ money is missing in FIRS. “We have a relationship with the Economic and Financial Crimes Commission, EFCC. We have a partnership, through which we combat evasion of taxes. People don’t want to get into trouble with EFCC. So, they pay on time.

He added that “FIRS acknowledges the statutory rights and responsibilities of anti-corruption agencies and other government agencies such as the EFCC, the Independent Corrupt Practices and Other Related Offences Commission (ICPC), State Security Services, (SSS) to inquire into the operations of the Service.

The FIRS Chairman promised that “the Service would continue to give access to agencies with statutory rights and all those who seek information on the operations of the Service. Invitations of officials of the Service by EFCC, the Police, SSS and ICPC to shed light on financial transactions and operations of the Service, in the past, are not uncommon and are continuous.”

He noted that “the FIRS is a public trust, which we operate on behalf of Nigerians. He also affirmed that no officer of the FIRS is at large.”

He re-assured the general public of our unalloyed commitment to public accountability and transparency in the sacred mandate of tax collection.