FIRS boss Fowler blames economy for low tax cash

The Executive Chairman of the Federal Inland Revenue Service (FIRS), Mr. Babatunde Fowler, yesterday said the nation’s tax cash grew from N12, 190.52trillion between 2012 and 2014 to N16, 771.78 trillion from 2016 to 2018. He said the growth represented an increase of 37. 58 per cent. He also insisted that he had grown the tax returns from the Non-Oil Sector by N1, 304.20trillion (21 per cent) from 2016 and 2018.

He said the strategies put in place by the FIRS boosted the Value Added Tax (VAT) during the period 2015-2017, which led to approximately 40 per cent increase over 2012-2014 collections. He said the poor shape of the economy accounted for a drop in the nation’s tax revenue. He insisted that he had performed well within the mandate given to him by the administration of President Muhammadu Buhari. It was learnt that there was disquiet in the Presidency over Chief of Staff to President Abba Kyari’s query to Fowler because he was allegedly not directed by the President to do so. Fowler made these clarifications in an August 19, 2019 response to the query. He said: “I refer to your letter dated 8‘” August, 2019 on the above subject matter and hereby submit a comprehensive variance analysis between budgeted and actual collections for each main tax item for the period 2012-2018 as requested (see appendix 1). “Your letter stated that actual collections for a 3-year period were significantly worse than what was collected between 2012 and 2014. Total actual collection for the said period was N14, 527.85 trillion, while total actual collection between 2016 and 2018 was N12, 656.30trillion. “The highlight of these collection figures was that during the period 2012 to 2014, out of the N14, 527.85 trillion, oil revenue accounted for N8, 321.64 trillion or 57.28% while non-oil accounted for N6, 206.22 trillion or 42.72% and during the later period of 2016 to 2018 out of the N12, 656.30 trillion, oil revenue accounted for N5, 145.87 trillion or 40.65% and non-oil revenue accounted N7, 510.42 trillion or 59.35%. “FIRS management has control of non-oil revenue collection figures while oil revenue collection figures are subject to more external forces as highlighted below. “From the above, the non-oil revenue collection grew by N1, 304 20 trillion or 21% within the period 2016 to 2018. Kindly note that the total budget collection figure during 2012 to 2014 stood at N12, 190 52 trillion compared to N16, 771.78 trillion for the period 2016 to 2018 which represent an increase of 37.58% “ Fowler gave the details of how the economic recession and drop in oil production accounted for the variance in the budgeted and actual revenue collection. He added: “Please note that the variance in the budgeted and actual revenue collection performance of the Service for the period 2016 to 2018 was mainly attributed to the following reasons: “The low inflow of oil revenues for the period especially Petroleum Profit Tax (PPT) was due to fall in price of crude oil and reduction of crude oil production. Notwithstanding government efforts to diversify the economy, oil revenues remains an important component of total revenues accruable to the Federation. “The price of crude oil fell from an average of $113.72, $110.98 and $100.40 per barrel in 2012, 2013 and 2014 to $52.65, $43.80 and $54.08 per barrel in 2015, 2016 and 2017. “There was also a reduction in crude oil production from 2.31mbpd, 2.18mbpd and 2.20mbpd in 2012, 2013 and 2014 to 2,12mbpd, 1.81mbpd and 1.88mbpd in 2015, 2016 and 2017 respectively.“The Nigerian economy also went into recession in the second quarter of 2016 which slowed down general economic activities. Tax revenue collection (CIT and VAT) being a function of economic activities were negatively affected but actual collection of the above two taxes were still higher in 2016 than in 2012 to 2014. “During the years 2012, 2013 and 2014, GDP grew by 4.3%, 5.4% and 6.3% while in 2015, 2016 and 2017, there was a decline in growth to 2.7%, -1.6% and 1.9% respectively. The tax revenue grew as the economy recovered in the second quarter of 2017.” The FIRS chairman said the agency had increased the revenue from Value Added Tax (VAT) from 2015 to 2017, which led to approximately 40% increase over 2012-2014 collections. He said: “It is worthy of note that strategies and initiatives adopted in collection of VAT during the period 2015-2017 led to approximately 40% increase over 2012-2014 collections “In 2014, the VAT collected was N802billion, compared to N1.1trillion in 2018. The increase is attributable to various initiatives such as ICT innovations, continuous taxpayer education, tax enlightenment, etc. embarked upon by the Service. “Furthermore, it is pertinent to note that when this administration came on board in August 2015, the target for the two major non-oil taxes were increased by 52% for VAT and 45% for CIT. Notwithstanding the increase, FIRS has in line with the Federal Government’s revenue base diversification strategy has grown the non-oil tax collection by over N1.304trillion (21%) when the total non-oil tax collection for 2016-2018 is compared to that of 2012-2014. “I am confident that our current strategies and initiatives will improve revenue collections and meet the expectations of government.” A source in government said: “The Chief of Staff acted on his own without any directive from the President. If you look at the tone of the query, there was nowhere he said ‘I am directed’. This was why the Presidency came out to clarify that Fowler is not under investigation. “The position of the government is that such observations on revenue are not within the purview of Kyari, whose portfolio is unconstitutional. It is the business of the National Assembly to raise such a query.”


Source: Sundiata Post