A review and amendment of existing tax laws are critical to efforts of states and local government to improve internally generated revenue (IGR).
“There may not be much improvement on IGR if provisions of the existing tax laws which are obsolete are not reviewed and amended,” said, Mr. M.L Abubakar, Secretary to the Joint Tax Board (JTB).
In an article published in the Nigerian Leadership Initiative (NLI), Volume 2, Abubakar noted that, “Over the years, revenue sharing by the Federal Ministry of Fiannce’s Federation Account Allocation Committee (FAAC) to the State formed the major source of funding for the State’s annual budgets. This trend has ceaselessly continued due to so many factors some of which are neglect of internal sources of revenue, inadequate application of tax laws and legislation and lack of political will on the part of government.
“Generally speaking, availability of oil revenue to the country has blindfolded government authorities at all levels so much that sectors like agro-allied and mining industries which hitherto provided the needed revenue are now near moribound. There is no gainsaying that revenue from agricultural activities, solid minerals gradually dwindled over the years since the discovery of crude oil in Nigeria. This phenomenon continued unchecked to the extent that items, which contributed substantially to the gross domestic products (GDP) in the past are today being imported to support the growing population.”
In the article, titled, Internally Generated Revenue: Diversification of revenue base without multiple taxation, he observed that as at 2008, the contribution of IGR to total revenue in 28 states was less than 10 per cent, while Kwara state and Lagos state had 41 per cent and 131 per cent IGR contribution to total revenue.
Highlighting strategies that can be adopted by states to improve IGR contributions, Abubakar said, “In order to adequately harness revenue collectible internally, it is important that the tax authority is able to identify its tax payers by their locations, nature of business and tax type payable.
This can be achieved by an effective means of registration of tax payers through direct enumeration, street combing, tax payer registration exercise at designated centers and liaising with stakeholders like banks, government and private organisations by having access to list of employees and companies that are registered for award of contracts.
In addition to the above means, the recent efforts of tax authorities to register taxpayers electronically using biometrics would in no small measure improve taxpayer data base in the Nigerian tax system.
The taxpayer Identification Number (TIN) project embarked upon by the 36 tax Boards of Internal Revenue (BIRs) and the Federal Inland Revenue Services (FIRS) aimed at providing a common platform of registering taxpayers online will greatly provide taxpayer database and form a good foundation for achieving real-time tax collection which is a global focus of all modern tax systems”.