FIRS records lopsided tax base as Lagos contributes 70% of Nigeria’s tax revenue

The Society of Women in Taxation (SWIT) has revealed that Lagos State contributed 70 percent of the N5.2 trillion taxes collected by the Federal Inland Revenue Service (FIRS) in 2018.

The tax group said the revelation is disheartening and worrisome. SWIT stated that the difference in taxation shows there is a lopsidedness in States’ contribution in Nigeria and this is not good for the country’s economy.

It was revealed during this year’s edition of  the SWIT Seminar, which forms part of the yearly tax conference of the Chartered Institute of Taxation of Nigeria (CITN), that the gap in tax collection across States shows that the long four-year tax reforms and campaign doesn’t have any impact in other States.

The Pioneer Chairperson of SWIT, Justina Okoro, was bothered by the contribution of other States which was estimated at 30 percent of the total tax collection by the tax regulators.

Solution to the unbalanced tax base

According to Okoro, there is a need to expand tax collections into the interior parts of Nigeria if the number of people in the tax pool is to increase and the nation’s tax base is to expand.

“FOR INSTANCE, OUT OF THE TRILLIONS OF NAIRA GENERATED BY THE FEDERAL INLAND REVENUE SERVICE (FIRS), 70 PER CENT CAME FROM LAGOS, WHICH MEANS THAT 35 STATES PLUS FCT CONTRIBUTED ONLY 30 PER CENT.

“THAT ALSO MEANS THAT THERE ARE SO MANY STATES WITH NEARLY NO PRODUCTIVE ACTIVITIES HAPPENING, AND BY IMPLICATION ARE NOT PAYING TAX. IF LAGOS DECIDES TO BECOME A SOVEREIGN STATE, NIGERIA WILL NOT BE ABLE TO GENERATE ANY REVENUE FROM TAX.

“GOVERNMENT MUST TAKE SERIOUSLY TAX REVENUE GENERATION JUST LIKE WHAT IS BEING DONE WITH CRUDE OIL. THEY SHOULD GO INTO THESE PLACES WITH NATURAL RESOURCES AND MAKE IT ANOTHER REVENUE BASE.”

Okoro said the cities are the only ones living up to their tax commitment, while suburbs and local councils are lagging behind. She is of the opinion that Government is losing tax in states mining gold, diamond, and other natural resources.

There is a need for the FG and State Governments to partner: To ensure seamless and hitch free tax collection, Okoro said the Federal Government and the Governors in each state need to collaborate to weigh methods that can make these states viable and attractive to investors who will create more productive activities that would increase the tax base and revenue collection.

SWIT criticises FG’s increasing borrowing

Meanwhile, the Federal Government’s increased borrowings have not gone without notice by the SWIT members. The tax group’s incoming National Chairperson, Kudiirat Abdulhamid, wonder why the Government would ignore revenue generation opportunities and opt for credit facility.

Abdulhamid argued that debt increase will tie Nigeria’s resources to payment and servicing of loans. In her view, taxation is more profitable and bankable when they are used for developmental projects that will benefit Nigerians.

She said if the nation’s taxes are used judiciously, Nigerians will be eager to continue paying tax because the Government has provided basic amenities. However, when these infrastructures are not available, citizens won’t be encouraged to perform their tax obligation.

“I AGREE WITH PEOPLE COMPLAINING OVER GOVERNMENT BORROWING, BUT IF CITIZENS PAY TAXES AND IT IS JUDICIOUSLY UTILISED FOR PROVISION OF THIS SERVICES, PEOPLE WILL BE EAGER TO PAY MORE.

“BUT WHEN GOVERNMENT BORROWS MONEY WITHOUT PROVIDING INFRASTRUCTURES, CITIZENS WOULD BECOME ANGRY.”


Source: Nairametrics

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