✕ CLOSE Online Special City News Entrepreneurship Environment Factcheck Everything Woman Home Front Islamic Forum Life Xtra Property Travel & Leisure Viewpoint Vox Pop Women In Business Art and Ideas Bookshelf Labour Law Letters
Click Here To Listen To Trust Radio Live
SPONSOR AD

BVN can shore up revenue – Expert

What is the effect of the dwindling revenue accruable to government and how should this be addressed? The dwindling revenue is not coming as a…

What is the effect of the dwindling revenue accruable to government and how should this be addressed?
The dwindling revenue is not coming as a surprise. As we all know prior to the fall in oil prices there has been dwindling revenue in terms of the volume of oil products coming into the country. The price of oil some few years ago was high and because of that we didn’t notice that the volume accruable to government was coming down. We have joint venture agreements with international oil companies and in the past there were divestments of our shareholdings, and because of that equity accruable to the federal government is being transferred to the accounts of the NPDC. This started since 2010.

What is the way out?
I think government has to take a holistic approach; it is not only oil, but for now the immediate solution lies in blocking all leakages and the long-term solution is to explore other sources of revenue.. Government, I believe has information which it can use to block such leakages.
On the matter of revenue, I am happy the government has taken the right step by introducing the TSA.

Apart from TSA what about calls for increase in VAT, Customs and Excise duty etc. Do you subscribe to this?
Taxation is an equation of business and politics so we need to be careful about increasing taxes. But I am aware that we have one of the lowest VAT rates in the region.

Meaning you support VAT increase?
Yes, because the advantage is that it will boost revenue. It is a consumption tax that you pay without even knowing, but the most important thing is that even with the present  five per cent, there is still a lot of potential. There are lots of transactions that have not been captured. Government can increase or widen the tax net so that more VAT payers could be captured.

FG has given FIRS a target of over N1 trillion for 2016. What’s your take on that?
Yes, targets are good but what deliberate actions are being taken to increase collection? Apart from maybe big supermarkets, how many charge VAT and how many are captured by the FIRS? There are several other transactions that attract VAT in the private sector. How effective has the FIRS been in increasing revenue?

What about the states? We have the peer review mechanism…

One of the greatest challenges they have is the political will. In the hierarchy of the three tiers of government the lower you are the more challenging it is to collect tax because you get closer to the people. Because of political interference and double standards in the implementation of the revenue laws, state governments need political will to enforce the necessary laws.
These are also businesses not registered with the CAC. A lot of the owners earn incomes higher than government workers yet they don’t pay tax, so that is a challenge. State governments have to find of means of capturing this group. That leads us to the issue of database. How many state governments have database of individuals outside the payroll system? This is important because with good database it becomes easier.

How can the BVN help?
The people in this informal sector have bank accounts, meaning that they have BVN. That is an identity that could be used as a tax base. So within the confines of the law, state governments could explore working with the CBN in this regard.

Are there revenue leakages in the states too?

Yes, and it starts from even the assessment. Before revenue is paid an assessment has to be carried out by the tax officer. Leakages can occur from that point; when there is under assessment it could be due to lack of knowledge or collusion. Then the collection mechanism, you’ll be surprised to find out that in some states revenue is still being collected in cash. When you do that, you should expect leakages.

Join Daily Trust WhatsApp Community For Quick Access To News and Happenings Around You.

UPDATE: Nigerians in Nigeria and those in diaspora can now be paid in US Dollars. Premium domains can earn you as much as $17,000 (₦27 million).


Click here to start earning.