According to the National Bureau of Statistics (NBS); Adamawa State is among the top 10 states in Nigeria with the lowest Internally Generated Revenue (IGR) in the third quarter of 2019. Adamawa state also recorded a decline of 47.04% in revenue generation with only N6.8bn generated. This is not good for an ‘aspiring’ state.
If no creative and feasible measure is taken, the state may not leapfrog its IGR, or would witness more decline in local revenue generation
Well, the situation is not only Adamawa’s, most states in Nigeria still battle with dwindling federal allocations; poor innovations on internally generated revenue (IGR); bloated workforces and fraud-riddled workers’ payrolls.
Generating substantial internal revenue is an important task and policy for any serious government; thus, it is a critical situation that requires critical measures. The Adamawa State government should look at ways to generate revenue other than over-depending on the declining federal allocations. The easiest way is through massive IGR. But, once IGR is mentioned, we mostly cast our minds to the old methods of taxation, which unfortunately have a history of corruption and inefficiency, and thus most Nigerians are sceptical of the taxes and levies of many state administrations.
Adamawa State can generate new revenues and wealth through levies and taxations, but the government must move away from the ‘rocket-science’ approach to tax collection. We must admit that Adamawa does not have flourishing economic activities that are profitable and easy to tax without upsetting the common people.
Adamawa State should introduce a modified system of awarding ‘tax collection rights’ to investment firms. This should be modelled according to it’s economy, culture, needs and environment. The state can agree with a firm to give government monies in advance for taxes from a certain sector, while the firm would then subsequently collect the money by operating as a tax agent for the state, through the famous tax auction systems. For example, if it is projected that Adamawa’s revenues from taxis, buses and lorry services in a certain local council can generate one million naira a month, an innovative investment firm could agree to give a state government about 800,000 naira in advance. Then the firm will collect these taxes in the local councils for that particular month. This type of arrangement can be implemented across sectors of the economy of the state using what operations researchers call the ‘reductionistic’ approach, whether monthly, quarterly or every year.
A good investment firm will make the tax collection efficient and fair by reaching agreements with taxpayers on how to pay and enjoy the incentives around this too. This type of arrangement can assist the state to have tax efficiency and tax fairness, and the government will relieve itself from the burden of tax collection and would have the needed revenues in advance (which could be up to a 10-year advance payment). It would also generate thousands of jobs, while government tax officers would be kept very busy in the area of regulations.
We must also remind ourselves that many of us including government officials misunderstood or rather misapply the use of consultants. The consultant’s major task is to support the government with specific areas. Consultants are mainly catalysts for innovation and invention – they are simply, the resource, and the facilitator in tax administration. The leadership and ownership of the process remain government officials.
Land use charges are an important instrument in revenue generation for the government. The state government should cash-in in that area. The Fintiri government should entirely overhaul and simplify the land title registration, ownership of Certificate of Occupancy (C-of-O) and documentation of all land transactions. The Adamawa Geographic Information System should also be resuscitated and introduce a seamless payment process for the land use charge as well as eliminate all multiple taxations.
Apart from innovations in the collection of taxes, Adamawa State can look into leveraging on the assets it has. There are thousands of unserviceable vehicles, farm implements and many types of electrical equipment. Government can make money by auctioning such items. Furthermore, the state has some under-utilized buildings – completed and uncompleted, fenced and unfenced plots of land. ( e.g The liaison and guest houses in Abuja, Kaduna and Lagos) These assets are commercially viable. They can be leased or sold. Funds can be generated from these arrangements. Also, the state can discuss with there CBN and other financial hubs- there are billions of free monies there.
Zayyad I. Muhammad writes from Jimeta, Adamawa state – [email protected]
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