Customs, 62 other MDAs to stop direct revenue collection – Tax Reform Committee

The Presidential Committee on Tax Policy and Fiscal Reforms announced that the Nigeria Customs Service and 62 other Federal Government Ministries, Departments, and Agencies (MDAs) would cease collecting money directly from citizens.

On Channels Television’s Sunrise Daily breakfast show on Wednesday, Committee Chairman Taiwo Oyedele made this revelation.

According to Oyedele who is former Fiscal Policy Partner and Africa Tax Leader at PriceWaterhouseCoopers (PwC), the Federal Inland Revenue Service (FIRS) will now collect revenue for the MDAs.

He stated that Nigeria’s revenue collection from taxes is one of the lowest in the world but the cost of collection is high.

“Ironically, our cost of collection is one of the highest. And the reason for that is that we’ve got all manners of agencies. The Federal Government alone, we have 63 MDAs that were given revenue targets last year, no; actually in the 2023 budget,” he said.

“And two things that would come up from that: on one hand, these agencies are being distracted from doing their primary function which is to facilitate the economy. Number two, they were not set up to collect revenue, so, they won’t be able to collect revenue efficiently.

“So, move those revenue collection function to the FIRS. It has two advantages: the cost of collection and efficiency will improve, these guys will focus on their work, and the economy will benefit as a result,” Channels quoted him saying.

When asked for clarity on his comments, he said these MDAs are not set up to collect revenue on behalf of the federal government, therefore, should focus on their primary responsibilities.

“If you are Customs, focus on trade facilitation, border protection and if you are NCC (Nigerian Communications Commission (NCC), just regulate telecommunications. You are not set up to collect revenue.

“It can be your revenue and someone else can collect it for you. There will be more transparency because you see what is being collected and is accounted for properly. It is also a way of holding ourselves to account as to how we spend the money we collect from the people.”

Recall that on Tuesday President Bola Ahmed Tinubu inaugurated a tax reforms committee with a 400-levep Economics student of University of Ibadan (UI), Orire Agbaje, as a member.

Speaking further, he said Nigeria’s tax gap is estimated around N20trn as many members of the elite evade paying the exact taxes they should remit to the government.

“As of today, we have significant tax gap estimated in the region of 20 trillion or even more naira. If you focus more on the few major taxes – Value Added Tax, Corporate Income Tax, Personal Income Tax, a lot of people are not (tax) compliant, particularly the middle class and the elite, some of them are in the tax net with one or two fingers, you pay a thousand naira as tax when you should have paid N10m,” he said.