(By Ojike Wekulom)-
In this piece, Chief Wekulom, Abua – born chartered tax consultant and former chairman of Rivers State Board of Internal Revenue (during the administration of former Governor Peter Odili), and now retired from Federal Revenue Service, explains how the administration of Governor Ezenwo Wike in Rivers State can improve on its internally generated revenue. The message is clear and in simple language.Read on:
In public services such as maintenance of security, provision of good roads, water health care system, education, electricity, housing, markets, to mention a few are necessary for the social and economic wellbeing of the people of a given society. The discharge of these responsibilities requires a great deal of funding; otherwise their provision cannot be sustained in the long run. Government therefore imposes taxes on the citizens primarily to meet the spending needs to maintain an adequate level of public investment and social services. Taxes constitute the main source of raising revenue in both developed and developing countries.
Nigeria became independent in 1960. With impending independence the colonial authorities had to prepare the grounds for fiscal policies that would address post-colonial development challenges. In 1958 the Raisman Fiscal Commission was set up to look into fiscal issues in the country to help solve the problems of inconsistency and confusion inherent in the existing tax laws.
It was also mandated to examine the jurisdiction and powers of the various tiers of government in Nigeria’s post-independence.
The commission recommended harmonization of taxation principles throughout the country and this report formed the basis of the Nigerian tax system to date.
Nigeria as a developing country has low tax to GDP ratio which is attributable to narrow tax base, inelastic tax system, unnecessarily complex, distortions and inequitable tax laws and incentives, weak tax administration and weak mobilization of provincial taxes.
This situation is further strained by the oil revenue which accounts for over 80% of government Revenue at the Federal, states and local governments levels. The large size between tax-gap and National Development needs suggest an increase in the tax effort by all tiers of government in an equitable and efficient manner.
Since assumption of office in 2015, the Rivers State Governor His Excellency Chief Ezenwo Nyesom Wike has implemented a number of strategies in tax administration to grow the size of revenue generated in the state. His first steps was to strengthen the autonomy of the Board of Internal Revenue by upgrading the status of the executive chairman to report directly to him and also made the chairman a member of the state Executive council.
These steps reduce all the bottle necks and communication gaps between His Excellency and the Revenue Board.
2. A committee was also set to harmonize the taxes, levies and fines collectable by the state and local government councils. This was done with a view to eliminating multiplicity of taxes in the state.
3. As part of the re-engineering process, His Excellency Chief Ezenwo Nyesom Wike’s administration launched the Tax Management Identification System on the 1st of April, 2018 and made it mandatory for all businesses and individuals in the state to acquire a Rivers State Tax Identification Number (RIVTIN). All payments into government coffers are henceforth linked to a database that issues electronic receipts to the tax payers.
A personal electronic Tax Cards (E-TCC) has been introduced and the tax payment process made more transparent and convenient for tax payers.
The aim of all these initiatives by the Rivers State Government are to optimize the state tax potentials by achieving a substantial coverage of the state tax payers base, ensure proper accountability for taxes paid, enhance self assessment, reduce the incidence of tax evasion and avoidance, improve on the state tax administration and make it more responsive, reliable, skillful and tax payer friendly.
While commending the state government for the giant strides so far initiated to rake in the much desired revenue to augment the spending needs to maintain an adequate level of public investment and social services, there is need to mention here that taxation is like cat and rat game. Government wants more from taxpayers, whereas the taxpayers on the other hand want to pay as little as possible through various schemes of tax avoidance and tax evasion.
It is for this reason that taxation is seen as a very dynamic subject matter that requires practitioners on both sides to be on top of their situations at all times by constantly reviewing their strategies Therefore guided by the principles of a good tax system, it is necessary at this point to suggest some strategies for adoption by the state to enhance the performance of the revenue generation machinery.
i. CREATING CONVENIENCE IN TAX PAYMENT: Tax payment should be brought closer to the people and where their economic activities are domiciled as much as possible. Tax operations can be segmented into;
1. Headquarters functions:
2. Regional functions
3. Tax office/mini tax office functions
Tax/mini tax offices can be spread across all the markets and communities in the state. Officers at this level are to work with various trading groups and community leaders, as the case may be, to gather information for tax assessment and collection at the Regional Tax Offices.
ii. CREATION OF MORE OPERATIONAL UNITS: To improve efficiency in the tax administrative structures and move closer to the target of total compliance, more operational units are to be introduced and manned with well trained and experienced staff who have enough experience and training to analyze trends in each sector of the economy. These officers will be responsible for sectors like Oil and Gas, Aviation, manufacturing, banking, insurance and other financial institutions, hotels and catering services, engineering, health, professional services, public sector, trading and construction. A unit can also be set to handle the peculiar needs for assessment of professional associations such as lawyers, accountants, engineers, architects etc ( who are in private practice.)
iii. ADMINISTRATIVE STRUCTURE: It is important to create an effective administrative structure to enable for the citizens pay taxes with ease and dismantle the obsolete system that cannot cope with changes in technology and processes. In this regard, a three level tax administrative structure in the model of South African Revenue Service (SARS) is recommended.
The structure integrates and distributes functions into three levels as listed below;
Head office functions
Regional office functions and
Tax office functions
Head office function includes:
>Staff recruitment, promoting and discipline
>Capacity building and general staff welfare
>Reorganization/segmentation of staff into career paths e.g ICT, Media and Tax officers.
>Manage the newly created professional units.
>Legal and enforcement units
<Manage Central Audit/Back duty assessment unit
>Oversee regional office functions
>Interface with other Revenue authorities, banks, ministries, Nigerian Financial Intelligence Unit (NFIU), Joint Tax Board, International bodies etc. to gather information, investigate recalcitrant tax payers and prosecute tax defaulters and
>Set revenue targets
Regional Office Functions: It is at the Regional level that daily tax operations are carried out. Major functions at this level include but not limited to:
Processing taxpayers assessment forms.
Assessment and collection of taxes from the informal sector including markets, self employed etc.
Warehouse taxpayers database for the tax jurisdiction
Fully computerized to accommodate the volume of information required for tax assessment.
Carry out enforcement
Process tax clearance.
Headquarters, Recommended Regional, Tax/Mini Tax offices
Tax office functions : The focus of the suggested Tax offices spread across the state is not to assess or collect taxes. Their main functions include.
Interface with community Tax Assessment Committees (To be constituted).
Provide Taxpayer support services
Data scrubbing within the area
Arrange Taxpayers Education and Enlightenment Services.
Business Intelligence Units ;To Educate small Business owners on record keeping
Integrated tax administration system ; There is need to integrate all the Tax processes under one leadership
– Motor licensing
– Direct assessment (PIT)
– Business premises registration
– Stamp duties etc all under the same roof and management so that taxpayers information could be easily cross-matched for assessment purposes
Taxpayers education and enlightenment; The taxpaying public need to be given adequate sensitization on sustainable basis to enable them appreciate their right, duties and obligations under the relevant tax laws. The print and electronic media as well as Town Hall meetings should be used to carry the message of tax compliance across the nooks and crannies of the state. Opportunities should be created for representatives of the chamber of commerce, Financial institutions, professional groups, Traditional Rulers, Trade and Market Associations to discuss on the government expectations from them in well organized Town Hall meetings.
TAXPAYER ENUMERATION: The tax authority can develop a reliable data bank at the Headquarters and Regional Offices. Segmenting taxpayers according to income brackets, geographical location (Rural/urban), Business Groups, Occupation and size of businesses.
INTERNALLY GENERATED REVENUE DEDICATED PROJECTS: We had earlier mentioned the constitution of Assessment Committees at the Village , communities and political ward levels. Records of Revenues collected from such communities shall be well kept. As soon as a community reached and surpassed a particular revenue target an IGR dedicated project is located in the community to encourage others to comply. These projects are to have direct bearings on the people and the public at large. Such projects can create some degree of partnership between the taxpayers and the government and as well encourage voluntary compliance.
Collaboration with other agencies : Reliable and timely information about taxpayers income and income sources are some of the potent tools to facilitate realistic and realizable tax assessment. To this end, both formal and informal sources of information are to be exploited to bring tax defaulters to book.
Mechanism to regularly monitor, identify and document those involved in large scale transactions in our Local Markets through the recommended Tax offices to be located in the Markets are to be sustained. Tax officers are to collaborate with the office of the Accountant General where contractors are paid, Ministry of Lands, request for BVN (where necessary) of suspected tax defaulters, obtain information from Banks, NFIU, Join Tax Board and other revenue authorities. Sharing information with Federal Road Safety Commission (FRSC), Department of Customs and Exercise, contract awarding ministries, Immigration department, ICPC, EFCC and code of conduct Bureau will all enhance the assessment processes especially estimated / Best of judgment assessment.
Staff motivation; The Tax authority should introduce a range of incentives for diligent and dedicated officers. The tax should be adequately remunerated. There are lots of hazards in collecting taxes in an economy under recession, a group insurance policy could be considered for the staff. Revenue targets could be set for offices and those who achieve and surpass such targets be rewarded.
A region that also performs well should be commended and rewarded. This will create a sense of purpose, discipline and commitment on the part of the staff and also translate into more effectiveness in the discharge of assigned responsibilities.
There is need to mention here once again that the Rivers State government under the able leadership of His Excellency Chief E. N. Wike has experienced unprecedented progress in revenue generation since he assumed office in 2015.
We need also to emphasis here that fulfillment of the fundamental objectives which include: economic, social, political and environmental objectives constitute the major indices for measuring Governance and that citizens pay taxes and expect that these basic needs are vigorously pursued with the taxes paid. The giant strides made by the present administration in Rivers State under His Excellency Chief E N.Wike CON, CSSRS towards improving the living standards of the citizens through the spread of development projects across the nooks and crannies of the state has made the task of tax administration a lot easier because the public is getting reward for their money through the provision of social amenities.
It is also noted that the strategies introduced so far in overhauling the system has eased self assessment and payment of taxes and as well impacted positively in revenue generation in the state.
However, improving the revenue performance of the state is a continuous task that requires constant review of the strategies adopted in tax administration by way of employing modern techniques, integrating the tax system to ease tax assessment, create regional and mini tax offices, employ, professionals and integrate the tax administration system. Creating regional and mini tax offices to be located in all the state markets, villages, communities and political wards will adequately mobilize provincial taxes. Traditional rulers, market masters, executives of market Associations, Bureau De change etc could be appointed into Assessment committees to bring their members to the tax net. This should be followed with an aggressive enlightenment campaign to create awareness and build a tax compliance culture.
#Wekulom sent this piece from Port Harcourt