FIRS AND THE PUNCH FOR FUNDS

The tax body is on the right path to boosting the country’s finances

Most recently, the Federal Inland Revenue Service (FIRS), the nation’s foremost tax organisation, has upped its strategies to rake in more money to prop up Nigeria’s sickly economy. The agency has pledged to expand the taxation net and bring in more people into its fold, besides operating a transparent and efficient tax system that would optimise revenue collection.

  According to Mr. Sunday Ogungbesan, acting executive chairman of FIRS, the agency intends to do this by engaging and dialoguing with tax payers instead of its earlier combative strategies of shutting down defaulting companies or “naming and shaming” defaulters through newspaper publications, measures that are unhelpful and indeed counterproductive to the overall economy.

“When I was appointed the chairman” said Ogungbesan, “I was thinking it is our responsibility to seal up companies that fail to pay tax. But we sat down and did a rethink. If will seal up a company, what will happen to its workers and their services? It will affect the Gross Domestic Product (GDP), it will affect people who are working in the organisation and you will be denying the public the value of the goods. That is why we started to engage these taxpayers.”

It is significant that the tax body is adding brains to muscles in an effort to raise revenues for increasing services. Countries the world over depend largely on taxes to drive their economy and provide the much needed services to the people. Despite the country’s vast size and resources the FIRS has a list of 450,000 registered companies in its fold. Even as short as it is, only 125,000 of the lot in Africa’s largest economy perform their obligatory duties of paying taxes to the government. But now that the country’s public finances are in a dreadful mess as a result of a sharp fall in oil revenues, there is a new pressure on the tax body to provide more money to address pressing issues in the economy.

There are no easy ways out of the hole, but the tax authorities seem to be coming out with clever ideas to address the declining revenue. The FIRS is doing more to ensure that companies and indeed individuals perform their civic responsibilities. It is bending the law creatively so that companies can pay their taxes even in bits and pieces. It is also beefing up its revenue through the automation of its system in the introduction of the integrated tax administration system (ITAS), automation of taxpayer registration and issuance of tax identification number (TIN) to both corporate and individuals and for tracking and remittance of value added tax (VAT) from key sectors.
FIRS has also introduced e-tax payment, an online electronic system and it is collaborating with the Office of the Accountant General of the Federation to ensure source deduction. Besides, it is working with the Central Bank of Nigeria (CBN) to enforce compulsory registration with the tax authority by companies and individuals before they can access their bank accounts. These are bold and encouraging measures and we heartily endorse them. 

However, for all its drive and ingenuity, not much can be done to enhance tax administration if there is no comprehensive database of tax payers. Moreover, there is urgent need to revise existing legislations and simplify our tax laws, some of which are out of tune with present realities. Indeed, FIRS is canvassing a centralised tax administration for ease of revenue collection and for easy identification of tax payers throughout the federation. And perhaps more important, the tax authorities must simplify the process of payments to meet with global best practices while tax expenditure must be transparently governed. Many people would be encouraged to pay their taxes if “their money” is seen to be appropriately spent.