Friday, 2 October 2015

Fowler: Challenges of increasing tax revenue


Barely one month ago when his appointment as acting Executive Chairman of the Federal Inland Revenue Service (FIRS) was announced, not a few Nigerians who should know applauded the appointment. He had a rich background and antecedents in government revenue matters to flaunt. Mr. Babatunde Fowler, the legendary chairman of Lagos Inland Revenue Service (LIRS), thus assumed leadership of the FIRS almost immediately, pledging to work with state revenue agencies and relevant stakeholders to shore up tax revenue and improve on the country’s tax administration.


While taking over the mantle of office from his predecessor,  Sunday Ogungbesan, on August 21,  Fowler told the staff of the service that the FIRS should be able to take the lead in tax revenue collection as well as share information and ideas with the states’ Boards of Internal Revenue to improve tax administration in the country. True to his character, he did not mince words when he assured of a new era at FIRS which would be predicated on the resolve of the presidency to ensure maximum increase in tax revenue to end the country’s absolute dependency on oil proceeds.


Hear him: “My vision and mission is neither to alter the existing management organogram structure in FIRS nor lay off management staff from their duty posts, but to take FIRS as well as the nation’s tax system to an enviable height. This we cannot achieve all alone without a robust partnership and collaboration of all stakeholders within and outside the system. We must build a synergy for a healthy exchange of information between FIRS and SBIR.


“This synergy will produce the best form of revenue generation in the FIRS and the states in general as well as ensuring that over dependency on oil revenue becomes a thing of the past.”


Use of consultants for tax collection


Against the backdrop of unending insinuations that the acting chairman would introduce consultants to help him in tax assessment and collection in the FIRS, Fowler debunked it all. The use of tax consultants to collect taxes, a practice that is prevalent among state governments, has been criticised as illegal and open to corruption between the consultants and state governors.


At a meeting of the Joint Tax Board (JTB) in Abuja recently, Fowler said that the staff strength of the FIRS was not enough to undertake all that would be required in tax administration and as such, consultants would be engaged but their duties would be exclusive of tax assessment and collection.


His words: “You can imagine a staff roster that can audit the books of well over 400, 000 corporate organisations.  It won’t work. Therefore to increase the level of transparency and accountability, we would engage consultants.  But these consultants will only gather data.  The law does not allow them to undertake assessment. The law does not allow them to collect revenue on behalf of government.


“Consequently, they will collect data; they are to assist our staff.  We will do the assessment and issue the Demand Notice for the tax to be paid”.


Compliance level


On his view of the level of tax payers compliance, the chairman regrets that slightly over 30 per cent companies and other businesses pay tax in the country.  A situation, he said; must change.


According to him, “there are about 450, 000 corporate organisations with only one out of every three paying tax. Based on our objectives, we want to have at least 99.9 percentage success level of compliance. Meaning that every individual at the state level and every corporate organisation at the federal level is in the tax net and pays the appropriate type of tax.


“We have exchanged information with all states’ Internal Revenue Boards. We have all the information on the database.  We have given them out already and in case they need further information that they currently don’t have on their database, we will always collaborate with them.  With this development, we should have a growth in tax payers both at the state and federal levels within one week.”


Fowler warned that organisations that evade taxes would be made to face the law in a civil suit in order to collect outstanding arrears and Chief Executive Officers of such organisations could face criminal charges.


The meeting, according to Fowler, was to enable the JTB fashion out a roadmap to provide a workable tool for both the FIRS and the Internal Revenue Boards of the states with a view to raising the level of tax revenue in the country.


Experts in the sector have been quick to align with the acting chairman on this note, positing that there are many stones left unturned as far as the country’s current tax administration processes are concerned.


For example, they argue that it is common knowledge that the administration of the Value Added Tax (VAT) is greatly hindered by many factors, ranging from inadequate coverage of ‘VATable’ persons to non-remittances of VAT deductions. Tax revenue loss in this aspect can only be imagined.


Fowler has so far been quick to respond to this obvious gap in revenue generation when he stated at a forum recently too, saying: “I have also identified the fact that there is deficiency on our part as tax administrators in terms of collaboration and cooperation in the areas of exchange of information for tax purposes.”


He said that the FIRS and the state boards would have to work with greater synergy in the areas of conducting joint audit exercises by FIRS and SBIRs; carrying out joint tax enlightenment and enforcement exercises; sharing and exchanging of information concerning unremitted taxes identified by either side; embarking on joint training programmes and workshop; reviewing and amending tax laws and legislations from time to time.


FIRS-Kogi State collaboration


The acting FIRS chairman has no doubt sold his vision across the board for urgent implementation. Days ago, he caused a representative to spread the message of his war against tax evasion to Kogi State.


At that event, the FIRS called for a unique collaboration with the state’s Inland Revenue Service against current and potential tax evaders. Disclosing that a new technology designed to checkmate such tax dodgers as being currently employed in the avaition and power sectors would be deployed to other sectors very soon, the FIRS under Fowler gave the five areas of envisaged collaboration with the states as follow:


  • Joint tax auditing

  • Information gathering and sharing

  • Joint training

  • Education and sensitisation and

  • Tax law review.

Who’s Fowler?


He was the Chief Executive Officer/Executive Chairman of the Lagos State Board of Internal Revenue from 2005 to 2014.


He had his higher education in the United States where he obtained a Bachelor’s degree in Economics from the University of Wisconsin and a Masters of Business Administration degree from the California State University.


Before joining the service of the Lagos State Government, Dr. Fowler worked in the banking sector for about 20 years with long stints at Credit Lyonnais Nigeria Limited and Chartered Bank.


Under his leadership, the Lagos State Board of Internal Revenue reportedly achieved a sharp increase in internally generated revenue from an average of N3.6. billion per month in January 2006, to an average of about N20.5 billion per month in 2013.


Fowler, who holds an Honorary Doctorate Degree of the Irish International University, is a Fellow of the Chartered Institute of Taxation of Nigeria and the Business Management Association of the United Kingdom.


With his coming to the FIRS, expectations are high that Fowler, who got the tax revenue generation right in Lagos, would in no time replicate his success in his current beat. Opinions too suggest that the Senate would in all wisdom confirm his appointment to enable him deliver with every authority of his office. Of note is the fact that the FIRS has not had a substantive chairman since the departure of Ifueko Omogui-Okauru in 2012.


 


  • Adegoke is an Abuja-based media consultant




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