The Presidential Committee on Tax Policy and Fiscal Reforms has announced that the Nigeria Customs Service and 62 other Ministries, Departments, and Agencies (MDAs) of the Federal Government will cease direct revenue collection. Instead, the Federal Inland Revenue Service (FIRS) will take over the responsibility of revenue collection for these MDAs.
According to Taiwo Oyedele, the Chairman of the Committee, Nigeria’s revenue collection from taxes is relatively low compared to international standards, while the cost of collection remains high. He pointed out that the numerous agencies involved in revenue collection are often distracted from their primary functions and are not necessarily equipped to collect revenue efficiently. To address these challenges, Oyedele suggested that revenue collection functions be centralized under the FIRS.
The move to centralize revenue collection under the FIRS is expected to yield several benefits:
1. **Cost Efficiency:** Centralizing revenue collection is likely to reduce the overall cost of collection. By consolidating revenue collection functions, duplication of efforts and resources can be minimized.
2. **Focus on Core Functions:** MDAs can better focus on their primary functions, such as trade facilitation, border protection, and regulation, without being burdened with revenue collection tasks.
3. **Transparency and Accountability:** Centralized revenue collection promotes transparency as it enables clearer tracking of collected funds and ensures proper accountability in the use of revenue.
Oyedele emphasized that agencies like the Nigeria Customs Service and the Nigerian Communications Commission (NCC) should concentrate on their core functions rather than revenue collection. This shift of responsibility will not only improve efficiency but also enhance transparency and accountability in revenue management.
The committee’s chair further highlighted that Nigeria’s tax gap, the difference between the taxes owed and the taxes collected, is estimated to be around N20 trillion. This gap is largely due to non-compliance by individuals, especially within the middle class and elite segments of society. The committee’s goal is to improve tax compliance, capture previously untaxed revenue, and streamline the tax system to make it more conducive for businesses.
In addition to centralizing revenue collection, the committee intends to repeal certain taxes that hinder business operations and discourage compliance. The aim is to create a more efficient and effective tax system that fosters economic growth while maximizing revenue collection.
