The Presidency appears unhappy with the taxes the Federal Inland Revenue Service (FIRS) has collected in the last three years.
This is despite the fact that the FIRS generated the largest revenue in the nation’s tax history when it collected N5.3 trillion in taxes in 2018 and is targeting N8 trillion in 2019.
The Presidency conveyed its displeasure at the FIRS’ collection efforts in a query issued to the Executive Chairman of the FIRS Mr. Tunde Fowler by the Chief of Staff to the President Alhaji Abba Kyari.
The query circulating in the social media titled, “RE: Budgeted FIRS Collections and actual collections” reads; “Your attached letter (FIRS/EC/ECW/0249/19/027 dated 26 July 2019) on the above subject matter refers.
“We observed significant variances between the budgeted collections and actual collections for the period 2015 to 2018. Accordingly, you are kindly invited to submit a comprehensive variance analysis explaining the reasons for the variances between budgeted and actual collections for each main tax item for each of the years 2015 to 2018.
The query marked “Restricted” added that “we observed that the actual collections for the period 2015 to 2017 were significantly worse than what was collected between 2012 and 2014. Accordingly, you are kindly invited to explain the reason for the poor collections.
Kyari directed Fowler “to respond by 19 August 2019.”
The query has raised questions over the propriety of the query given that there is no minister of finance neither did the query come from the Permanent Secretary of the ministry.
In January 2019, Executive Chairman of the FIRS Mr. Tunde Fowler announced in Lagos that the Service broke its collection records by generating N5.3 trillion from taxes collected and is targeting N8 trillion for 2019.
According to Fowler, the N5.320 trillion collection is considered to be the highest revenue ever generated by FIRS in history. The highest in FIRS was N5.07 trillion generated in 2012 under Ms. Ifueko Omoigue.
Fowler said “FIRS’ generation of N5.3 trillion is significant as it was at a period when oil prices averaged $70 per barrel. Oil price was at an average of $100 to $120 per barrel between 2010 and 2013.”
In realizing this milestone, the FIRS boss noted that the non-oil component of the N5.320 trillion is N2.467 trillion that was (53.62 per cent), while the oil element of the collection was N2.852 trillion (46.38 per cent). From audit alone, the FIRS collected N212,792 billion from 2,278 cases with a huge reduction in audit circle.
Inspite of this achievement, Tunde Fowler lamented that: “while we have been steadily increasing revenue collection over the years, our cost of collection has actually been going down. In 2016 we collected N3,307 trillion, in 2017 we collected N4,027 trillion and in 2018 we collected N5,320 trillion.
“Meanwhile, the cost of collection as a percentage of actual taxes collected has been reducing; in 2016 it was 2.6%, in 2017 it was 2.49% while in 2018 it was 2.14%.” The FIRS is entitled to 4% cost of collection.
He said “the Service has been making tremendous efforts in also increasing the amount of non-oil revenue it collects. Non-oil collection has contributed 64.99% in 2016, in 2017 it contributed 62.25% and in 2018 it contributed 53.62%. This represents the government’s focus on increasing non-oil sources of revenue and the diversification of the Nigerian economy.”