Federal Inland Revenue Service (FIRS) hopes to pull in about N750
billion from about 55,000 defaulting taxpayers.
Babatunde Fowler, FIRS Executive Chairman, disclosed this during the
budget defence held at the instance of House of Representatives joint
Committees on Finance, Appropriations, Aids, Loans and Debt
Management, Legislative Budget and Research and National Planning and
Economic Development on the 2019/2021 Medium Term Expenditure
Framework (MTEF) and Fiscal Strategy Paper (FSP), disclosed that the
substitution led to recovery of N23.25 billion.
He restated that the 85 per cent of VAT collected goes to State Governments.
“From the Bank Accounts substitution exercise, we used banking
information to bring non-compliant taxpayers with N1 billion and above
turnover to comply. It has so far resulted in the recovery of N23.35
billion. The exercise has been extended to cover those with turnover
of N100 million and above.
“To date about 500 of them have come forward and they have paid and we
have collected in the region of about N24 billion. We believe we
should be able to go through the 55,000 before the middle of this year
which will be the middle of this year, 30th June 30th.
“In terms of estimates, which we should be able to be able to generate
from this exercise alone, that will be about N750 billion.
Fowler who noted that FIRS recorded an increase in Value Added Tax,
VAT collection between 2015 and 2018 said FIRS is broadening its VAT
collection scope with the adoption of States Accountants Generals
(SAG) collection platform, VAT Auto-Collect, integration of the GIFMIS
platform with Ministries, Departments and Agencies, (MDAs) and through
e-Service payment options.
He was however categorical that VAT is not for the poor: “Out of about
N5.3 trillion, a large percentage is shared between states and local
governments. In VAT, there has been a growth of over 44 per cent
between 2015 and 2018. And that is at the current rate of 5 per cent.
“Now when you look at Africa as a continent, Nigeria still has the
lowest VAT rate. When we look at the items that are not VATable, basic
food is not VATable, medicals, education. But if you decide and you
have the ability to go to a restaurant to eat and drink the same thing
you can buy in the open market, then you pay VAT. So VAT basically is
a consumption tax and those who choose not to go to the open market to
buy their food and cook at home are subject to VAT.
“So it’s (VAT) not a hardship on the low income earners because
normally they don’t even go to hotels when their wives can cook at
home and they can have something very nice.
“But the same Nigerians who are complaining about an increase are the
same ones who go to Ghana and go and pay triple the amount in VAT or
go to London and pay higher amount.
“So we are just saying, like the minister said that we should get used
to the idea. And 85 per cent of VAT goes to the State Governments who
are supposed to be closer to the people. So they can use that money as
approved by their State Houses of Assembly. So they can use that money
on education, infrastructure, etc.
“Yes, we had in increase of about 32 per cent from N4.02 trillion in
2017 to N5.3 trillion in 2018. At the Federal level, clearly we can
see all the projects that are being completed, based on the available
funds at the Federal level. I’m just saying that if we keep on the
same way, the expectations cannot be different.
“For those who have the ability and the desire to take the choice, of
going to areas where they have to pay VAT, then they should be
allowed to pay VAT.
The FIRS Chairman told the committee that through enforcement
activities in respect of defaulting taxpayers from various tax
offices, tax audit and investigation assessments, FIRS has generated
the sums of N28. 51 billion and $77.83 million has been recovered.
“FIRS and the Economic and Financial Crime Commission (EFCC) Joint Tax
Force (JTF) was introduced in 2018 to enhance the fight against tax
related economic fraud. As at December 2018, a total of N6.94 billion
and $278,430 had been recovered by the JTF. This and other such
initiatives are continuous and will be continuous going forward.’’
He said that FIRS also initiated income tax on property owners in
Abuja and Lagos as part of efforts to deepen tax revenue collection
and expand the nation’s tax net as well as increase the revenue base.
“This project which initially targeted property owners in Abuja and
Lagos has so far yielded N4.3 billion, and is being extended to other
locations. In this regard, Oyo and Kaduna states have commenced.
“It is important to note that this is not a property tax but rather
the use of the provisions of the law to bring into the tax net
companies that own properties but failed to file necessary tax returns
and pay appropriate taxes due,’’ Fowler, explained.
On tax audit exercise of the Service, Fowler said: “This covers both
the National Tax Audit (NTA) and the Pioneer Audit (PA). The NTA
exercise contributed the sum of N212.79 billion to tax collection in
2018. Following improvements to the audit process and resultant
increased efficiency, the exercise is expected to produce increased
audit yield in 2019.”