(News investigators) The Executive Chairman, Bayelsa State Internal Revenue Service, Dr, Nimibofa Ayawei, yesterday said only Lagos, Ogun, and Kaduna states generate internal revenue, otherwise known as Internally Generated Revenue, IGR, above allocation received from the Federal Account Allocation Commission, FAAC.
Dr Ayawei who disclosed this at the 47th induction ceremony of the Chartered Institute of Taxation of Nigeria, CITN, noted that the other states solely depend on FAAC to meet their responsibilities to their citizens, stressing the states need to do more to boost IGR.
The guest lecturer among others, said: “We all know that the major sources of revenue to states have been from Federal Account Allocation Committee, FAAC, and Internal Generated Revenue, IGR. Generally, government has the responsibility to provide infrastructures, security, health, and education. Each tier of government meeting these responsibilities are subject to availability of resources, which require revenue. Incidentally, the number one source of revenue in the state is dwindling.
“We get more money from FAAC, and the basis of FAAC is oil. FAAC is almost becoming a spent-thrift. Therefore, the need to look inwards becomes necessary, which is IGR. Enhancing and sustaining IGR has been a major task for the states. There is always need to bridge the gap between revenue resources and budgetary by boosting IGRs at state levels.
“If you look at the figures of Nigerian governors’ forum, only about three states are able to generate IGR more than their FAAC allocations. These include Lagos, N554billion as against N253bilion from FAAC, Ogun State, N100billion as against N1.6billion from FAAC, and Kaduna N89 billion as against N79 billion from FAAC. All the other states rely heavily on FAAC. While IGR become the panacea to infrastructural development and funding of public services, the challenges behove on tax collections by the states.
“Bridging the gap involves looking at these areas. The most important untapped area is the informal sector. It is very large but is not taxed. So, looking inwards will involve looking at the informal sector which requires enlightenment on the part of tax practitioners. There are also many rich people in Nigeria who are not paying adequate taxes. Imagine somebody who buys a G-wagon, and pays tax of N35, 000 a year or even N200, 000 a year. You know that something is wrong somewhere.
Earlier, CITN President, Mr. Adesina Adedayo, in his welcome address, said “It is a given that, taxation in the 21st Century 4th Industrial Revolution era has transformed significantly. The digital economy has grown dramatically worldwide, leading to the growth in e-commerce and online transactions. Despite the advantages linked to the expansion of the digital economy, several challenges have also originated. In the midst of this challenges, tax implications of the digitalised economy are perhaps the most urgent that bedevils revenue authorities, policymakers of governments, international organisations and tax professionals.