Customs, 62 other MDAs to hands off revenue collection

The Presidential Committee on Tax Policy and Fiscal Reforms has issued a new guideline banning the Nigeria Customs Service and 62 other Ministries, Departments and Agencies, MDAs, of the Federal Government from direct  revenue collection.

The Chairman of the Committee, Taiwo Oyedele who spoke on Channels Television’s Sunrise Daily breakfast programme on Wednesday disclosed that the Federal Inland Revenue Service, FIRS, will now collect revenue for the MDAs.

In explaining the rationale behind this decision, Oyedele highlighted that Nigeria’s revenue collection from taxes is among the lowest globally, while the associated cost of collection remains disproportionately high. He emphasized that many MDAs, which were not originally designed for revenue collection, have been burdened with this task, diverting their focus from their core functions that are essential for economic facilitation.

He further clarified that:“The objective is to enable organizations like Customs to concentrate on trade facilitation and border protection, and regulatory bodies like the Nigerian Communications Commission to focus solely on telecommunications regulation. This realignment will enhance efficiency, decrease collection costs, and promote transparency in revenue management”.

Oyedele acknowledged that there might be resistance from stakeholders who currently benefit from the existing process, but underscored the committee’s intention to ensure that revenues are directed to the government as intended.

Commenting on the Treasury Single Account, TSA, initiative, he noted that it is a positive step but still requires further development. He expressed that the TSA will complement the committee’s efforts in optimizing revenue collection, but more actions are necessary to fully exploit its potential.

Oyedele, who was appointed to lead the committee by President Bola Tinubu, emphasized the gravity of Nigeria’s tax gap, which is estimated at around N20 trillion. He pointed out that a significant portion of the elite population evades accurate tax payments, contributing to this substantial gap.

The committee chair stated that the committee’s strategy includes bringing previously unaccounted-for revenue into the tax net, with the intention of streamlining existing taxes to foster a more business-friendly environment while increasing overall collection.

He outlined the overarching objective: “Our plan is to repeal many of the current burdensome taxes, without introducing new ones, and yet achieve greater revenue collection”.

This shift in revenue collection methodology signifies a significant step toward improving Nigeria’s tax system and enhancing its revenue generation capabilities.

Credible News reports that the President had earlier last month announced the constitution of the tax committee in order to harmonise some taxes.

However, Tinubu on Tuesday, inaugurated the presidential committee on fiscal policy and tax reforms chaired by Taiwo Oyedele.

The committee comprises experts from both the private and public sectors and will be responsible for various aspects of tax law reforms, fiscal policy design and coordination, harmonization of taxes, and revenue administration.

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