Thursday, June 12, 2008

Good News from the Tax Sector

To discerning Nigerians, the grim reality of the country’s sole dependence on income generated from oil revenue is a matter for serious concern. This virtual mono-cultural economic tendency is dangerous as it ties the nation’s fortunes to the vagaries of global oil market and the unpredictable socio-political situations in the country’s oil producing belt. Which is why the country’s economy was so badly affected by the international oil glut of the early 1980s as it is currently losing substantial revenue due to the extant volatile situation in the Niger Delta.
But it is a settled matter that most viable economies the world over are run on tax income efficiently collected and prudently expended for national development. This is why the revelation that the Federal Inland Revenue Service (FIRS) netted a tax revenue of N2.2 trillion within the last one year comes to us as a piece of good news.
According to reports, the collection, which spanned May 2007 to April 2008, showed a N300 billion overshoot on the N1.9 trillion target set for FIRS during the year by the Office of Director of Budget. This feat was attributed to the increased productivity of FIRS staff, the plugging of all loopholes and the agency’s zero-tolerance for corruption.
We commend the FIRS for this landmark achievement and for opening the nation¢s eyes to the viability of the tax system. That tax could yield so much shows the inherent potentials of this sector as a veritable national gold mine, even though it is largely untapped.
By this feat, the FIRS is laying the basis for developing the tax culture in this country and every citizen as well as governments at all levels, especially states and local governments, should embrace this new reality if we truly desire the much needed shift from over dependence on income from oil export for all our developmental needs. Indeed, this is the right time for Nigerians to imbibe the tax culture as an alternative income source because oil, on which the nation’s economy appears eternally dependent is an expendable resource as it can dry up any time.
The government should, however, be judicious in its expenditures as a way of encouraging the citizens to continue to pay tax. In other words, taxation imposes a certain level of responsibility on both the government and the governed: while the government has the responsibility to demand tax payment from the people, the latter in turn have the responsibility to pay reasonably imposed taxes and hold their government responsible for non-satisfaction of their developmental needs.
While it should be noted that tax evasion is a criminal offence, it is a well known fact that many Nigerians, especially corporate organizations, are grossly under-taxed. The FIRS should do everything within its powers to fish out these tax-dodging citizens and make them perform their civic responsibilities. This is where the plan to introduce tax identity numbers to all taxable adults and companies should come handy towards boosting tax collection and curbing tax evasion.
States and local government tax administrators would do well to take a cue from the laudable efforts of the FIRS to shore up their respective internally generated revenues (IGR). To be sure, any state with a viable IGR should have no business relying solely on monthly hand-outs from the federation accounts. And this would augur very well for the much canvassed fiscal federalism.