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FIRS: Quiet, steady progress in tax reforms Ikeja

Posted by Sunmola Olalekan Private Ikeja
Price: NGN 10
A major national lesson for the government and citizens of Nigeria over the last five years is that oil revenue, on which the country is almost totally dependent to fund development, cannot be relied upon to take the country to its desired developmental destination.
For decades, local and international economic observers had cautioned against near-total dependence on oil revenue. In 2012, for example, the International Monetary Fund (IMF) advised developing countries that taxation would play a key role in their bid to move their citizens out of poverty. “Developing countries must be able to raise the revenues required to finance the services demanded by their citizens and the infrastructure (physical and social) that will enable them to move out of poverty. Taxation will play the key role in this revenue mobilization,” counselled the IMF.
Such warnings were, however, treated with indifference, abetted by favourable oil prices on the international market. The result was a culture of complacency, marked by reluctance to seek alternative revenue sources. This, of course, meant that the country was incapable of optimally generating revenue needed for infrastructural and human capital development needs from the vast range of activities in its economic space, a paradox, given the size of its economy. By 2014, Nigeria started feeling the pinch when international oil prices began tumbling, leaving the Federal Government unable to meet its obligations and forcing it to borrow to pay salaries of civil servants. Government at other levels naturally suffered the same fate, as many were unable to pay salaries let alone embark on capital projects. The tumble would grow into a nosedive, with prices crashing from $105 per barrel to $53 per barrel in 2015. This was the situation the current administration inherited in 2015, with the country slipping into recession the following year. Faced with the oil price crisis, the government of President Muhammadu Buhari knew it had to look elsewhere to find funding for the various programmes it promised Nigerians. The administration decided to focus on internally-generated revenue and sought a man to drive the process. The mantle fell on Babatunde Fowler, who was appointed chairman, Federal Inland Revenue Service (FIRS) in 2015. Fowler came in on the back of an impressive record of performance at the Lagos State Internal Revenue Service (LIRS), which he made the model of revenue mobilisation in the country. It was hardly the best period to come into office, given parlous state of the economy, squalid voluntary tax compliance rates (partly encouraged by absence of tax conscience among eligible taxpayers as well as failure of tax administration to recognise the importance of communication) and poor revenue collection processes, which made leakages easy.

Source: Sun news
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