Opinion
FIRS: Tax, The Untaxed and the Taxables
By Salisu Na’inna Dambatta
It is common truth that no country on earth, including Nigeria, is able to tax all the taxables, or even bring all the untaxed into the tax net. Tax registers everywhere rarely contain all the untaxed as required by the tax laws.
FIRS Achieves Milestone: N5.5 Trillion Tax Revenue In Record Time
Even though the Federal Inland Revenue Service (FIRS) which last tax year (2022) celebrated a record N10.1 trillion tax collection for the federation, the country wants it to generate more than that amount of money in 2023.
It is a positively achievable ambition by the top tax man, Muhammadu Nami, who turbo-charged the tax gathering machinery to haul that N10.1 trillion despite low oil revenue and targeted tax waivers and holidays granted to encourage higher economic activities in some sectors. In 2022, over ₦1.8 trillion was granted in tax waivers and incentives. If this had been collected by the FIRS in tax revenue, the agency would have raked in almost N12 trillion in 2022.
As at the half of 2023, the FIRS had raked in over N5.5 trillion. Two interesting facts make this tax revenue collection remarkable. One, it is the highest tax revenue collection made in the first six months of any fiscal year. And in June of 2023 alone, N1.6 trillion was raked in—the highest tax revenue collection made in a single month in Nigeria’s history.
While ₦10.1 trillion is phenomenal by any standards, a doubling of this can be achieved by the FIRS and State Revenue Services if they can successfully tax the untaxed and bring in the taxables. A consultant’s report submitted to the former Minister of Finance, Mrs. Kemi Adeosun identified and listed about a thousand taxable activities that could yield huge revenue for Nigeria that were yet untaxed.
For instance, the countless iron mongers in cities, towns and villages all over the country, who forge beautiful doors, windows, security and ornamental railings, are definitely untaxed. The National Bureau of Statistics reported that in the third and fourth quarters of 2021 iron, steel and metals worth N837 billion were imported to Nigeria. Road-side informal iron-mongers who turn a significant portion of those products into useful items do not pay tax on their production activities.
The furniture industry in Nigeria has been transformed beyond imagination. So also the entertainment sector. Both are probably untaxed, or minimally taxed. The two sub-sectors can be taxed appropriately to boost Federal government revenue.
Hewers of wood, lumberers and drawers of water are depleting our forests, turning Savannah to sahelian bushes, rain forests into derived Savannah, just to produce charcoal for energy and timber for construction and furniture, without being taxed. Taxing them heavily enough can discourage the destruction of the country’s flora, and consequently, fauna, and the whole environment.
Another way in which huge tax revenue is lost is through dodging withholding tax by landlords who own rental properties such as residential, business premises and even undeveloped plots let out to mechanics and other artisans.
Huge number of warehouses let out at profitable rates are mostly untaxed, especially those which are located in the outskirts of major cities: Lagos, Abuja, Kaduna, Port Harcourt, Kano, Ibadan, Warri, Onitsha and even Owerri, among others.
The “unrecorded and unmonitored” economy, reportedly constituted a huge 57.7 per cent of the country’s total economy in 2022. It thrives and enriches its operators, but deprives the national treasury of a fraction of its treasures through the payment of taxes or fees and levies.
“The size of Nigeria’s informal (shadow) economy is estimated to be 57.7% which represents approximately $1,164 billion (over a trillion USD) at GDP PPP,” a report based on Quarterly Informal Economy Survey (QIES) by World Economics, London, indicates.
The $1,164 billion shadow economy in 2022 alone, is just a shadow below nine times the cost of the Kano-Maradi and Kano-Dutse Gadawur dual track railway lines under construction. Nigeria borrowed $1.9 billion to finance the project. Collecting just ten per cent of $1,164 billion would have almost covered the price of the project.
That lost tax revenue derivable from the shadow economy could have been utilised in massive rural electrification projects to power micro and small businesses that contribute to economic growth in rural areas.
It is perhaps in its bid to tax the untaxed that the FIRS recently entered a partnership with the Market Traders Association of Nigeria (MATAN), where the FIRS would educate members of MATAN on tax payments and cooperate with them to charge and remit Value Added Tax (VAT) in the course of their businesses. This masterstroke partnership may hold the key to untapping the volume of taxes hitherto uncollected from country’s trillion-dollar worth informal sector.
More of these kinds of partnerships need to be seen between tax authorities and organized unions in the business place if the FIRS and its colleagues in the State Internal Revenue Services must tax the untaxed taxables.
Salisu Na’inna Dambatta is a retired federal Director of Information.
Heineken Lokpobiri, minister of state for petroleum resources, says the federal government plans to commence implementing the drill-or-drop provisions of the Petroleum Industry Act (PIA).
Section 94 of the PIA gives operators a period of three years to begin oil production or relinquish the assets to the federal government.
Speaking during the Cross Industry Group (CIG) meeting held on Tuesday in Florence, Italy, Lokpobiri said it is in the best interest of the country that all inactive wells go to work.
He said the federal government, under the leadership of President Bola Tinubu, has provided every necessary incentive to ensure international oil companies (IOCs) in Nigeria run smoothly and profitably.
“Now, it is imperative for these industry players to match the government’s efforts with increased investment by announcing final investment decisions (FIDs),” he said.
Furthermore, Lokpobiri discussed “the challenges, expectations, and measures to enhance the sector’s contributions towards domestic energy needs and regional expansion across Sub-Saharan Africa”.
He emphasised that while IOCs have highlighted engineering, procurement, and construction (EPC) contractors as a challenge, “EPCs will not come unless they see strong commitments from industry players”.
“The government has done its part to provide the requisite and investment-friendly fiscals, the ball is now in the court of the IOCs and other operators to make strategic investment decisions that will drive increased production and sustainability in the sector,” he said.
“We must also recognise that domestic crude supply is essential to national energy security. The best solution to this challenge lies in increasing production, which will ensure a balance between domestic supply obligations and external commitments.”
The minister further urged industry players to explore collaborative measures, such as shared resources for contiguous assets and the release of underutilised assets to operators ready to invest in production.
The Progressive Students Movement (PSM), a leading Pan-African student body, has commended the leadership of the Nigeria Police Force (NPF) in Ogun State under Commissioner of Police (CP) Lanre Ogunlowo, PhD, for its commitment to security and community engagement.
In a statement released on Thursday, the President of PSM Nigeria, Comrade Ambassador Okereafor Bestman, highlighted the CP’s efforts in strengthening collaboration between the police, stakeholders, and other security agencies to maintain peace and stability in the state.
“It is worthy of note that CP Lanre Ogunlowo, PhD, has further fostered a harmonious working synergy between the police, stakeholders, and other security agents aimed at ensuring peace and tranquility in Ogun State,” Okereafor said.
The student leader expressed confidence in CP Ogunlowo’s leadership, stating that Ogun State is on track to becoming one of the most peaceful states in Nigeria under his administration.
He also praised the professionalism and dedication of the Ogun State Police Command in tackling crime, regardless of its scale.
Additionally, PSM acknowledged the Ogun State government’s continued support for security agencies, particularly in providing mobility and logistics to enhance their operational efficiency.
The commendation comes at a time when security remains a top priority for residents and authorities in the state, with ongoing efforts to curb crime and ensure public safety.
BY ABUBAKAR YUSUF
On assumption of duty in January, 2025 , the new Universal Basic Education Commission, UBEC, Boss and well grounded World Bank expert , Aisha Garba envisaged the need to reposition the Basic Education through interfacing with the critical stakeholders.
Amongst them is the office of the National Security Adviser , NSA, led by Malam Nuhu Ribadu whose achievements in the last few years in the area of security has become distinct and outstanding.
Therefore, seeking to cooperate and collaborate with the office became germane and needful particularly the protection of lives and properties of actors in the promotion of Basic Education ranging from the pupils , teachers , workers and facilitators to enable it drive the new wave to curb Out of School Children OOSC in the country.
Aside providing the basic security arrangements for schools , the need to engage the security apparatus at the level of National Security Adviser NSA became needful, so as to address the sophistry of security problems in the country, to nip in the bud any unforseen circumstances.
With the high rates of kidnappings, abduction , banditry, cattle rustling, ritual tendencies among many other vices, the idea of bringing on board , the security architecture of the country in all ramifications will assist the commission to consolidate the implementation of Basic Education policies and programs, also introduce new ones .
Since pupils at the Primary, Junior Secondary and Secondary Schools are prone to such ugly development and security issues , the need to be proactive on the part of the commission became timely and desiring.
This led to the success story of the bilateral interface between the management of the commission and NSA, to streamline, perfect and chart a new course on the issue of security of actors in the Basic Education.
The visit described as timely and long overdue, discussed fruitfully the way forward and the immediate and long term intervention of both agencies in the area of collaboration.
According to the Executive Secretary, Universal Basic Education Commission UBEC, Dr Aisha Garba she stated by discussing” strategic initiatives aimed at enhancing educational access and security in Nigeria. ”
She further said” the engagement focused on strategies to address challenges such as the safety of schools, particularly in vulnerable regions, and the promotion of equitable education for all children.”
“the meeting highlighted the critical intersection between education and national security and the need for collaboration between UBEC and Office of the National Security Adviser (ONSA), on improving access to basic education and safety of safety schools across the nation. ”
“This collaboration underscores the government’s commitment to fostering a secure and inclusive learning environment as part of its broader agenda to strengthen the nation’s educational framework,” it added.
“UBEC boss had pledged to engage critical stakeholders to break down barriers to education and create inclusive learning opportunities for children across the six geopolitical regions of the country.”
“She said: “My goal is to deliver on this mandate which includes strengthening collaboration, partnerships and institutional learning for effective service delivery. ”
“Together, we will work to increase access, improve quality, provide conducive and safe learning environments, supply adequate teaching and learning materials, and adopt the concept of ‘best fit’ in addressing specific basic education challenges, state by state and region by region”.
Highlights of the program which included the engagement of both bodies with a commitment to ensure the introduction of security architecture in schools in Nigeria is achievable.
Written BY ABUBAKAR YUSUF on yus.abubakar3@gmail.com.