By Nkiruka Nnorom
On the backdrop of fall in Internally Generated Revenue (IGR) across the 36 states of the federation, investment experts at FBNQuest, the investment banking arm of First Bank of Nigeria Limited, have called for a review of the tax collection efforts by the various state governments in Nigeria in order to boost their revenue.
They stated this in a research report titled, “IGR Still in Need of a Boost”.
The aggregate internally generated revenue for the 36 states and FCT fell to N1.3 trillion in 2019 from N1.7 trillion in the previous year.
They condemned the unhealthy dependence by the state governments on the monthly payout by the Federation Account Allocation Committee (FAAC).
The report stated: “The anthem on boosting capacity and internal revenue has been overplayed and yielded minimal results to date. Apart from private sector collaborations, state governments need to review tax collection efforts and coordinate with their respective local governments, drawing heavily on technology.
“The breakdown of IGR shows that aggregate Pay As You Earn (PAYE) income tax accounted for 59 percent of total IGR in Q4. The weakest links with regards to revenue generated from the PAYE system were Taraba, Oyo, Kebbi, Katsina and Gombe states. These states achieved less than one percent of total aggregate PAYE revenue.
“For these states, jobs are predominantly within the informal sector. Hence most indigenes fall outside the tax net and as such, the states record very low contributions from PAYE income tax. Tax collection by agencies needs to be strengthened; better data collection would assist with achieving this goal.”