The Federal Inland Revenue Service has advised state Governors to look inwards and create alternative sources of revenue away from depending on revenue from oil sources.
The Executive Chairman of FIRS, Mohammad Nami, gave the advice at the 7th IGR Learning Event organised by the Nigerian Governors’ Forum (NGF) on Wednesday, in Abuja.
Nami urged the government at all levels to ensure that citizens feel the impact of the collected tax in their areas of responsibility.
He said: “In plain truth, the future of crude oil as a major revenue earner is very bleak. Going forward, taxation remains the only sustainable source of revenue anywhere in the world – Nigeria is not an exception.”
Nami added that taxation remained the most veritable tool in addressing the imbalance between the “haves” and the “have nots” in society.
He said that the use of taxation was important in balancing the social-economic standing of citizens.
The executive chairman said that beyond that, tax was the contribution members of the society make for their leaders to provide them with social amenities in appropriate quantity and quality.
“The citizens should not just hear budget figures but must, within their immediate living quarters, feel, see and experience effects of tax revenue.
“Government at various tiers must, in view of the constitutional provisions, imbibe the culture of value-for-money or, put in proper perspective, value-for-tax-money,” he said.
According to him, tax is the price paid in anticipation of decent living conditions, adding that tax-compliant citizens can legitimately expect their leaders to provide them with necessary amenities for a ‘good life.
Nami said that section 16 (b) of the Constitution of the Federal Republic of Nigeria (as amended) provides that “the state shall within the context of the ideals and objectives for which provisions are made in this Constitution, control the national economy in such manner as to secure the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunity.”
In his remarks, NGF Chairman and Governor of Ekiti State, Dr Kayode Fayemi, said that state governments recorded marginal growth in the IGR between 2016 and 2019, but recorded a 3.4 percent decline in 2020.
Fayemi, who was represented by the NGF Director-General, Asishana Okauru, said that governments recorded a compound annual IGR growth of 12 per cent from N687 billion in 2015 to N1.21 trillion by 2020.
He attributed this to reforms embarked on by the NGF, which included “legal revisions, policy directives, institutional restructuring, and technological innovations to improve tax administrative processes and procedures.”
Fayemi blamed the decline in IGR in 2020 on the COVID-19 pandemic, stating that “advancing beyond current revenue levels would warrant more systemic reforms to address low tax morale and voluntary compliance by taxpayers.
“The growing wave in tax avoidance and evasion especially among the informal sector is not unconnected with their belief that such cognitive dissonance is right.
“Such justification is often predicated on the principle of reciprocity and economic exchange for which they fault government’s commitment.
“Thus, where these incalcitrant taxpayers perceive a weak social contract, they call to question the legitimacy of taxes imposed on them by the law,” he said.
The Executive Secretary of the National Health Insurance Scheme (NHIS), Prof. Mohammed Sambo, described taxation and insurance as key tools in attaining Universal Health Coverage (UHC).
Sambo said that UHC entailed that all people could access sufficient and effective health care without financial hardship.
“UHC requires mandatory participation for greater cross-subsidies to promote equitable access the rich subsidize the poor, the healthy subsidize the sick and the active populations subsidize the extremes of life.
“While there are several options for financing UHC, social health insurance and taxation have proven to be two of the most popular social health insurance which mobilizes and pools financial resources from equitable enrollee contributions for the purchase of healthcare services.
“Taxation also has the potential to mobilize funds from various taxes which may or may not be equitable and may or may not be pooled for strategic purchasing,” Sambo said.
He, who said that one major challenge across the world in efforts to attain UHC was how to extend effective coverage to informal sector populations.
He said this was especially for those who were vulnerable, due to irregular incomes, poverty levels, relative inaccessibility and other issues.
“It is, therefore, necessary to improve on existing measures and explore innovative financing mechanisms to cover these groups.”
He said that NHIS recognised the importance of stakeholder engagements and partnerships in the collective quest to attain UHC.