A presidential committee on tax policy and fiscal reforms has ordered the Nigeria Customs Service (NCS) and 62 other federal government ministries, departments and agencies (MDAs) to stop collecting revenue directly.
POLITICS NIGERIA reports that the committee, which was inaugurated by President Bola Tinubu on Tuesday, said the Federal Inland Revenue Service (FIRS) will now collect revenue on behalf of the MDAs.
The chairman of the committee, Taiwo Oyedele, said the decision was taken because the current system of revenue collection is inefficient and costly.
“Our cost of collection is one of the highest in the world,” Oyedele said. “And the reason for that is that we’ve got all manners of agencies collecting revenue. The Federal Government alone, we have 63 MDAs that were given revenue targets last year.”
Oyedele said the MDAs are not set up to collect revenue and that they are being distracted from their primary functions. He also said that the FIRS is better equipped to collect revenue efficiently.
“So, move those revenue collection functions to the FIRS,” Oyedele said. “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.”
Oyedele also said that Nigeria’s tax gap is estimated around N20 trillion. This means that the government is not collecting as much tax revenue as it should be. Oyedele said the committee will work to close the tax gap by increasing tax compliance among Nigerians.
“As of today we have significant tax gap estimated in the region of 20 trillion or even more naira,” Oyedele said. “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 added that the committee will work to make it easier for Nigerians to comply with the tax laws. He said that the committee will also work to educate Nigerians about the importance of paying taxes.
“Our plan is to repeal many of the taxes that currently make doing business difficult without introducing new ones and yet collect more,” Oyedele said.
