Chairman, Nigeria Governors’ Forum (NGF), Governor Kayode Fayemi, on Monday, expressed the resolve of the subnational governments toward deepening the drive for improved domestic revenues through effective, efficient, fair and legal tax administration.
Fayemi who gave the assurance at the opening of the 6th Internally Generated Revenue (IGR) National Peer Learning Event held in Abuja, reiterated the need to leverage on relevant technology which presents a platform to strengthen our taxpayer databases; collaborate, share data, intelligence and information, and embrace advanced taxpayer profiling techniques to inform our approach to taxpayer management.
He, however, noted that the 2020 half-year year-on-year IGR performance reported a negative growth of 11.7 per cent for the 36 States and the FCT.
Fayemi said: “This year has presented us with a perfect storm of difficulties to deal with – from a health pandemic to the second economic recession in five years. At the wake of the COVID-19 pandemic, the Forum worked with the Federal Government, international partners, and the private sector to deliver the necessary response needed to contain the virus and ease out its impact on the lives of our citizens.
“These include the set-up of intervention funds, roll-out of social investment programmes, distribution of palliatives, initiation of tax incentive programmes to protect and support livelihoods and businesses.
“Unfortunately, the decline in oil prices that followed the global lockdown and the social unrest which echoed the demands of the EndSARS protests further worsened the country’s economic and social conditions for months. This exacerbated the already vulnerable fiscal environment for governments at both the national and sub-national level. Other accompanying trends have included rising inflation rate, degrading exchange rate and growing unemployment.
“As we work together to reflate the economy, the need to improve government revenues to adequately service planned expenditures cannot be overemphasised.
“The 2020 half-year year-on-year IGR performance reported a negative growth of 11.7 per cent for the 36 states and the FCT. Despite the overall decline, some states recorded positive growth. Three states in this category are Ebonyi, Gombe and Yobe which recorded more than 50 per cent in growth. I trust these States have experiences to share that others can learn from.
“At the federal level, a new Finance Bill is being proposed to provide a legal framework that underpins many of the reform recommendations to stimulate the economy and deliver an effective but friendly tax system. The Forum is actively engaging with the Federal Ministry of Finance Budget and National Planning on the provisions of the Bill, especially those impacting State taxes and jurisdiction. It is important the Bill services the interest of all and not a few.
“At the state level, we are professionalising our Internal Revenue Services to be taxpayer-centric and responsive to the new normal of digitalising tax administration. The world’s trade and financial market are going digital and we must adapt or be left behind.
“We are not canvassing or proposing for new taxes to be introduced but emphasizing the need for our Internal Revenue Services to be more strategic, innovative and pragmatic in administering those taxes, fees, levies and charges that have been legally prescribed for collection across various jurisdictions.
“Already, most states have passed a consolidated state revenue code as required under the World Bank SFTAS Program for Results (P4R) but more importantly to limit the incidence of multiple and illegal taxations. This implies that taxes, levies, fees and charges in these states are now harmonised.
“Other reforms being implemented by state governments under the SFTAS programme and as detailed in the “COVID-19 Response for Tax Authorities” issued by the NGF Secretariat and endorsed by us at the Forum earlier this year include: ending the contracting-out of tax collections and assessments; increased collaboration between the Internal Revenue Service, MDAs, and local governments; roll-out of tax-for-service initiatives; scale-up of cashless payments; and the deployment of a Geographic Information System (GIS) to support effective land administration and property taxation.
“Pivotal to the success of these series of reforms is taxpayer enumeration which is still very much weak. While technology presents us with a platform to strengthen our taxpayer databases, we must collaborate, share data, intelligence and information, and embrace advanced taxpayer profiling techniques to inform our approach to taxpayer management,” Fayemi said.
On his part, NGF Director-General, Asishana Okauru, expressed optimism in the capacity of the subnational governments towards taking on homegrown and international experiences and resources.
“At the time, it was borne out of oil crisis which saw government revenues crashing resulting in the country’s economy sliding into a recession in 2016. Over the period, we have made a tradition to around this time bring together the Commissioners of Finance and heads of tax authorities from the 36 States of the Federation and the Federal Capital Territory to discuss yearly events of what has worked, what has not worked and areas that require collective action.
Despite the lingering crisis posed by the COVID-19 pandemic which resulted into revenue shortfall and contraction in their tax base owing from the decline in business activities, Okauru disclosed that “Governments have been compelled to increase public spending to mitigate the impact of the pandemic, by setting-up testing and treatment centres from scratch and implementing targeted responses in public health, security, public works, social safety and other stimulus-targeted interventions, including tax relief for individual taxpayers and businesses.
“At the onset of the pandemic, the NGF Secretariat provided two important advisories for states – on taxes and federation revenues – including a tax advisory for tax authorities; and a budget advisory for State ministries of finance and budget which estimated the revenue gap expected from the fall in oil prices and shutdown in businesses.
“Although very useful, nearly 10 months after, we have seen the emergence of a second wave globally; here, we are starting to record daily cases which are as high as what was recorded 6 months ago. This means that the current economic and social risks are not going away soon. Governments must prepare actively to confront them.
“This meeting is one of those mechanisms for these discussions – for States to share their experiences about what measures proved most effective during the period of lockdown and after, as well as plans for 2021 to stabilise public finance and incentivise business recovery for jobs, growth and stability,” Okauru noted.
By Kehinde Akintola,
Nigeria Tribune