Governors of the 36 states of the federation have resolved to stop contracting collection of taxes to consultants, saying the huge commission being paid out to contractors would help swell the states’ internally generated revenue (IGR).
Chairman of Nigeria Governors’ Forum (NGF), Dr. Kayode Fayemi, who is also the governor of Ekiti State, said yesterday the planned review of the policy on revenue collection by states was part of reforms being considered to boost the financial outlook at the sub-national level.
Many states, notably Lagos, have contracted their revenue-collection duties to consultants despite having internal revenue collection agencies.
This has resulted in the loss of internally-collected revenue in the form of commission to the contractors.
Fayemi, at the sixth Internally Generated Revenue (IGR) National Peer Learning Event in Abuja, also listed other reforms being planned by the states.
He said: “Other reforms being implemented by state governments under the SFTAS programme and as detailed in the “COVID-19 Response for Tax Authorities” issued by the NGF Secretariat and endorsed by us at the forum earlier this year include: ending the contracting-out of tax collections and assessments.”
According to him, another resolve of the governors is to increase collaboration among the internal revenue service, ministries, departments and agencies (MDAs), and local governments; roll-out of tax-for-service initiatives; scale-up of cashless payments; and the deployment of a Geographic Information System (GIS) to support effective land administration and property taxes.
He said this year has presented the states with a perfect storm of difficulties to deal with, from a health pandemic to the second economic recession in five years.
He explained that at the wake of the COVID-19 pandemic, the forum worked with the federal government, international partners and the private sector to deliver the necessary response needed to contain the virus and ease out its impact on the lives of the citizens.
These, he said, include the set-up of intervention funds, roll-out of social investment programmes, distribution of palliatives, initiation of tax incentive programmes to protect and support livelihoods and businesses.
“Unfortunately, the decline in oil prices that followed the global lockdown and the social unrest, which echoed the demands of the #EndSARS protests, further worsened the country’s economic and social conditions for months. This exacerbated the already vulnerable fiscal environment for governments at both the national and sub-national level.
“Other accompanying trends have included rising inflation rate, degrading exchange rate and growing unemployment,” he added.
Fayemi said the governors worked together to reflate the economy, adding that the need to improve government revenues to adequately service planned expenditures cannot be overemphasised.
He said 2020 half-year year-on-year IGR performance reported a negative growth of 11.7 per cent for the 36 states and the Federal Capital Territory (FCT).
However, he stated that despite the overall decline, some states recorded positive growth, adding that three states in this category are Ebonyi, Gombe and Yobe, which recorded more than 50 per cent in growth.
He said the three states would have experiences to share with their other colleagues.
On the new finance bill, Fayemi said: “At the federal level, a new finance bill is being proposed to provide a legal framework that underpins many of the reform recommendations to stimulate the economy and deliver an effective but friendly tax system.
“The forum is actively engaging with the Federal Ministry of Finance, Budget and National Planning on the provisions of the bill, especially those impacting state taxes and jurisdiction. It is important that the bill services the interest of all and not a few.”
At the state level, the governor said they planned to professionalise their internal revenue services to be taxpayer-centric and responsive to the new normal of digitalising tax administration.
He added: “The world’s trade and financial market are going digital and we must adapt or be left behind. We are not canvassing or proposing for new taxes to be introduced but emphasising the need for our internal revenue services to be more strategic, innovative and pragmatic in administering those taxes, fees, levies and charges that have been legally prescribed for collection across various jurisdictions.”
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, quoted global analysts as saying that Nigeria remains the fastest growing economy in Africa.
She said business and economic indicators anticipated that the country’s path toward economic recovery would commence in the fourth quarter of 2020.
She said: “Overall, economic analysts have predicted that the global economy will recover in 2021, especially with the positive outcomes of the race toward the discovery of a vaccine. For Nigeria, economic analysts forecast that the economy will experience positive growth in the first or second quarter of 2021.
“Going forward, the impact of COVID-19 on the economic and fiscal revenue outlook for 2021 presents a significant opportunity for states to strategise and reposition your fiscal revenue management systems for this era called the ‘new normal’. Fiscal reforms are important now, more than ever, to mitigate against current and future risks, bearing any future pandemics or other global crises.”
She said the federal government has embarked on a fundamental strategy that comprises wide-ranging reforms in its tax policies and administration in the last few years.
For instance, she pointed out, the Finance Act 2019 and the Finance Bill 2020 have brought significant changes and consolidation to tax administration and management in the country.
The minister explained that the Finance Bill 2020 seeks to achieve the promotion of fiscal equity; reform domestic tax laws in alignment with global best practices; introduce tax incentives; support MSMEs and raise revenues for the government.
“Some of the key provisions of the bill include: tax relief for companies that donate to a COVID-19 relief fund; a reduction of 50 per cent in the minimum tax rate from 0.5 per cent to 0.25 per cent of gross turnover for financial years ending January 1, 2020, to December 31, 2020; an exemption from tertiary education tax by companies with turnover of less than N25 million; among others,” she said.
Ahmed explained further that the Finance Bill 2020 will amend extant laws in order to facilitate and strengthen revenue mobilisation and growth in 2021.
She listed the laws to be amended as the Capital Gains Tax Act, Companies Income Tax Act, Personal Income Tax Act, Tertiary Education Trust Fund (Establishment) Act, Customs and Excise Tariff, Etc. (Consolidated) Act, Value Added Tax Act, Federal Inland Revenue Services (Establishment) Act, Nigerian Export Processing Zone Act, Oil and Gas Export Free Zone Act, Fiscal Responsibility Act, Companies and Allied Matters Act 2020, and the Public Procurement Act.
Some of the other ongoing initiatives of the federal government, she said, include the Integrated Revenue Monitoring System; the implementation of the National (Single Window) Project; and the full nationwide adoption of the Joint Tax Board – TIN.
“With these initiatives, we seek to chart a new course for the tax system while addressing tax encumbrances for individuals and businesses in Nigeria,” she said.
Earlier, the Director-General of NGF, Mr. Asishana Okauru, said given the impact of the COVID-19 pandemic, governments at both the national and sub-national levels suffered revenue shortfall and contraction in their tax base owing to the decline in business activities.
He said governments have been compelled to increase public spending to mitigate the impact of the pandemic by setting up testing and treatment centres from scratch and implementing targeted responses in public health, security, public works, social safety and other stimulus-targeted interventions, including tax relief for individual taxpayers and businesses. of the 36 conditions of the organization have set out to quit contracting assortment of expenses to specialists, saying the gigantic commission being paid out to temporary workers would help swell the states' inside produced income (IGR).
Executive of Nigeria Governors' Forum (NGF), Dr. Kayode Fayemi, who is additionally the legislative head of Ekiti State, said yesterday the arranged audit of the strategy on income assortment by states was essential for changes being considered to support the monetary standpoint at the sub-public level.
Numerous states, quite Lagos, have gotten their income assortment obligations to specialists in spite of having inside income assortment organizations.
This has brought about the deficiency of inside gathered income as commission to the contractual workers.
Fayemi, at the 6th Internally Generated Revenue (IGR) National Peer Learning Event in Abuja, likewise recorded different changes being arranged by the states.
He stated: "Different changes being executed by state governments under the SFTAS program and as point by point in the "Coronavirus Response for Tax Authorities" gave by the NGF Secretariat and embraced by us at the gathering prior this year include: finishing the contracting-out of expense assortments and appraisals."
As per him, another purpose of the lead representatives is to build coordinated effort among the inside income administration, services, divisions and organizations (MDAs), and nearby governments; turn out of assessment for-administration activities; scale-up of credit only installments; and the sending of a Geographic Information System (GIS) to help powerful land organization and property charges.
He said for the current year has given the states an ideal tempest of challenges to manage, from a wellbeing pandemic to the second monetary downturn in five years.
He clarified that at the wake of the COVID-19 pandemic, the gathering worked with the government, worldwide accomplices and the private area to convey the essential reaction expected to contain the infection and straightforwardness out its effect on the lives of the residents.
These, he stated, incorporate the set-up of intercession reserves, turn out of social speculation programs, conveyance of palliatives, commencement of assessment motivating force projects to secure and uphold jobs and organizations.
"Sadly, the decrease in oil costs that followed the worldwide lockdown and the social turmoil, which repeated the requests of the #EndSARS fights, further demolished the nation's monetary and social conditions for quite a long time. This exacerbated the generally weak monetary climate for governments at both the public and sub-public level.
"Other going with patterns have included increasing swelling rate, debasing conversion standard and developing joblessness," he added.
Fayemi said the lead representatives cooperated to reflate the economy, adding that the need to improve government incomes to sufficiently support arranged consumptions can't be overemphasized.
He said 2020 half year-on-year IGR execution detailed a negative development of 11.7 percent for the 36 states and the Federal Capital Territory (FCT).
In any case, he expressed that regardless of the general decay, a few states recorded positive development, adding that three states in this class are Ebonyi, Gombe and Yobe, which recorded more than 50% in development.
He said the three states would have encounters to impart to their different associates.
On the new money charge, Fayemi stated: "At the government level, another account bill is being proposed to give a lawful structure that supports huge numbers of the change suggestions to invigorate the economy and convey a successful however benevolent expense framework.
"The gathering is effectively captivating with the Federal Ministry of Finance, Budget and National Planning on the arrangements of the bill, particularly those affecting state assessments and purview. It is significant that the bill benefits the interest of all and not a couple."
At the state level, the lead representative said they intended to professionalize their interior income administrations to be citizen driven and receptive to the new ordinary of digitalising charge organization.
He added: "The world's exchange and monetary market are going advanced and we should adjust or be given up. We are not campaigning or proposing for new assessments to be presented yet stressing the requirement for our inner income administrations to be more key, creative and practical in controlling those duties, expenses, exacts and charges that have been legitimately recommended for assortment across different locales."
The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, cited worldwide experts as saying that Nigeria remains the quickest developing economy in Africa.
She said business and financial pointers foreseen that the nation's way toward monetary recuperation would start in the final quarter of 2020.
She stated: "In general, monetary examiners have anticipated that the worldwide economy will recuperate in 2021, particularly with the positive results of the race toward the disclosure of an antibody. For Nigeria, financial examiners figure that the economy will encounter positive development in the first or second quarter of 2021.
"Going ahead, the effect of COVID-19 on the monetary and financial income standpoint for 2021 presents a huge open door for states to strategise and reposition your financial income the board frameworks for this time called the 'new ordinary'. Monetary changes are significant now, like never before, to moderate against current and future dangers, bearing any future pandemics or other worldwide emergencies."
She said the government has left on a major system that includes wide-running changes in its assessment approaches and organization over the most recent couple of years.
For example, she called attention to, the Finance Act 2019 and the Finance Bill 2020 have carried critical changes and combination to burden organization and the executives in the nation.
The pastor clarified that the Finance Bill 2020 tries to accomplish the advancement of financial value; change homegrown expense laws in arrangement with worldwide accepted procedures; present duty motivators; uphold MSMEs and raise incomes for the public authority.
"A portion of the critical arrangements of the bill include: charge alleviation for organizations that give to a COVID-19 help reserve; a decrease of 50% in the base expense rate from 0.5 percent to 0.25 percent of gross turnover for monetary years finishing January 1, 2020, to December 31, 2020; an exception from tertiary instruction charge by organizations with turnover of under N25 million; among others," she said.
Ahmed clarified further that the Finance Bill 2020 will alter surviving laws to encourage and fortify income assembly and development in 2021.
She recorded the laws to be changed as the Capital Gains Tax Act, Companies Income Tax Act, Personal Income Tax Act, Tertiary Education Trust Fund (Establishment) Act, Customs and Excise Tariff, Etc. (Solidified) Act, Value Added Tax Act, Federal Inland Revenue Services (Establishment) Act, Nigerian Export Processing Zone Act, Oil and Gas Export Free Zone Act, Fiscal Responsibility Act, Companies and Allied Matters Act 2020, and the Public Procurement Act.
A portion of the other continuous activities of the central government, she stated, incorporate the Integrated Revenue Monitoring System; the usage of the National (Single Window) Project; and the full cross country reception of the Joint Tax Board – TIN.
"With these activities, we look to outline another course for the expense framework while tending to burden encumbrances for people and organizations in Nigeria," she said.
Prior, the Director-General of NGF, Mr. Asishana Okauru, said given the effect of the COVID-19 pandemic, governments at both the public and sub-public levels endured income setback and compression in their expense base attributable to the decrease in business exercises.
He said governments have been constrained to build public spending to relieve the effect of the pandemic by setting up testing and treatment focuses without any preparation and executing focused on reactions in general wellbeing, security, public works, social wellbeing and other improvement focused on intercessions, including charge help for singular citizens and organizations.
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