Customs, 62 MDAs To Stop Direct Revenue Collection, FIRS Will Take Charge Presidential Committee

The Chairman of the Committee, Taiwo Oyedele, said Ministries, Departments and Agencies were not set up to collect revenue and they won't do it efficiently.

The Presidential Committee on Tax Policy and Fiscal Reforms says the Nigeria Customs Service and 62 other Ministries, Departments and Agencies (MDAs) of the Federal Government will stop direct collection of revenue.

The Chairman of the Committee, Taiwo Oyedele, who spoke on Channels Television’s Sunrise Daily breakfast programme on Wednesday, said the Federal Inland Revenue Service (FIRS) will now collect revenue for the MDAs.

Oyedele, a former Fiscal Policy Partner and Africa Tax Leader at PriceWaterhouseCoopers (PwC), said Nigeria’s revenue collection from taxes is one of the lowest in the world but the cost of collection is high.

“Ironically, our cost of collection is one of the highest. And the reason for that is that we’ve got all manners of agencies. The Federal Government alone, we have 63 MDAs that were given revenue targets last year, no; actually in the 2023 budget,” he said.

“And two things that would come up from that: on one hand, these agencies are being distracted from doing their primary function which is to facilitate the economy. Number two, they were not set up to collect revenue, so, they won’t be able to collect revenue efficiently.

“So, move those revenue collection function to the FIRS. It has two advantages: the cost of collection and efficiency will improve, these guys will focus on their work, and the economy will benefit as a result.

Asked for clarity on his comments, Oyedele said, “If you are Customs, focus on trade facilitation, border protection and if you are NCC (Nigerian Communications Commission (NCC), just regulate telecommunications. You are not set up to collect revenue.

“It can be your revenue and someone else can collect it for you. There will be more transparency because you see what is being collected and is accounted for properly. It is also a way of holding ourselves to account as to how we spend the money we collect from the people.”

Oyedele, chair of the committee inaugurated by President Bola Tinubu on Tuesday, said Nigeria’s tax gap is estimated around N20trn as many members of the elite evade paying the exact taxes they should remit to the government.

“As of today we have significant tax gap estimated in the region of 20 trillion or even more naira. If you focus more on the few major taxes – Value Added Tax, Corporate Income Tax, Personal Income Tax, a lot of people are not (tax) compliant, particularly the middle class and the elite, some of them are in the tax net with one or two fingers, you pay a thousand naira as tax when you should have paid N10m,” he said.

The tax expert said all of the revenue not captured before would be brought into the tax net.“In fact, our plan is to repeal many of the taxes that currently make doing business difficult without introducing new ones and yet collect more,” he said.