To make tax collection a new advent in a post Covid-19 economy, the Federal Government has been advised to explore digitisation, data, intelligence and compliance, an order of things, to ease tax collection and improve its revenue base.
Tax experts, speakers, panellists and government functionaries gave the advice at the recent First Annual National Tax Dialogue, in Abuja, organized by the Federal Inland Revenue Service (FIRS), with the theme “Taxation in a post-Covid Economy”.
The President, African Development Bank, Dr. Akinwunmi Adesina, while delivering the keynote address, highlighted the pandemic’s impact on Africa’s economy and the various interventions by the bank and national governments. Scaling the impact, he said Nigeria’s economy shrank “by 3% in 2020 on account of falling oil prices and the effects of the lockdowns on economic activities,” noting that “with shrinkage in oil revenues, debt service payments pose the greatest risk to Nigeria.”
Adesina having ticked the negative impact of the pandemic, pointed Nigeria to the exit: “Taxes must form a significant percentage of government revenue. Digitalisation of tax collection and tax administration is critical to ensure greater transparency of the tax system, widening of the tax base, while mitigating compliance risks and encouraging voluntary tax compliance.”
Ekiti State Governor, Dr. Kayode Fayemi, who was chairman of FIRS in the maiden tax discourse, lauded the FIRS “performance in the 2020 fiscal year, despite operating in the most challenging period many of us have experienced.” He was thrilled that: “The Service collected N4.9tr in taxes, achieving 98% of its target; only 30.6% of this was attributed to Petroleum Profits Tax, from what used to be over 50%.”
Governor Fayemi, however, made a detour and urged participants at the event to explore “how Nigeria can further deepen the use of technology to improve tax compliance nationally and across sub nationals.” He said this was important because “a significant proportion of our population will soon come into the workforce” which is “a golden opportunity to introduce first-time taxpayers to their civic responsibility, by adopting technology.”
In the line of using technology to generate revenue, Executive Secretary, African Tax Administration Forum (ATAF), Mr. Logan Wort, who joined the Dialogue virtual from South Africa, stated that “Domestic Resource Mobilisation (DRM) is expected to contribute at least 75% to 90% on average per country” in the post-Covid era, and suggested that Nigeria and other African countries should note that “improved tax revenue will have to take prime position” in the scheme of things.
Wort urged Nigeria to pay serious attention to e-commerce and the digital economy sector where big, trans-national digital conglomerates like Google, Netflix and Uber, operate and make huge, tax-free profits, as a possible way of increasing tax revenue generation. He said Nigeria should borrow a leaf from Ghana in e-commerce taxation, which is projected to fetch Ghana $450m in tax revenue.
In his recap of the keynote address as Chairman of the first panel session, Lagos State Governor, Mr. Babajide Sanwo-Olu, requested aid from AfDB to assists Lagos State take on the challenges of being the former capital city of Nigeria as well as the issues created by the pandemic.
Minister for Communications and Digital Economy, Dr. Ali Isa Pantami, who chaired the second panel, insist taxpayers should be treated as kings and demanded better funding of the FIRS.
It was unanimously resolved and agreed that tax administration should leverage on technology across the entire taxpayer identification, registration and filing process to ease compliance and administration. Also, discussants made a strong case to link the National Identification Number (NIN) with the taxation processes.
The panellists observed that the funding threshold established for the FIRS in 2007 was no longer adequate for the Service to discharge its functions optimally. In this regard, they urged the Federal Government to increase funding for the FIRS so that it can complete work on its 17-Storey Revenue House Headquarters in Abuja where it planned to establish a data centre focused on proprietary technology.
Minister of State, Finance, Budget and National Planning, Prince Clement Agba, who delivered the vote of thanks noted that the theme of the Dialogue “is most appropriate, timely and apt,” admitting that “this national dialogue has understandably witnessed a torrent of ideas, information, statistics, interpretation and vision on how best we can improve on solving the current revenue challenges of the government.
“The role of the media in strategically communicating our thoughts to the people cannot be over-emphasised. It is therefore very important that the views expressed here today are disseminated to the wider readership and audience and clearly this task has been in the very capable hands of the men and women of the Fourth Estate of the realm to whom we owe our gratitude.”