The Federal Inland Revenue Service (FIRS), is seeking ways to improve on revenue generation by State governments following shortfalls in allocations from federation account.
The FIRS however believes that one way to achieve this is for revenue generating authorities at all levels to embrace automated processes and e-solutions for effective tax administration.
The Executive Chairman of the service, Mr Muhammad Nami, gave the advice on Monday in Abuja, at the first Nigeria Governors’ Forum (NGF) Technology and Tax Event for heads of State Inland Revenue Services and authorities.
The event organised by NGF in partnership with the World Bank and the International Centre for Tax and Development (ICTD), was aimed at supporting a learning ecosystem for tax administration in Nigeria.
Nami, represented by an Executive Director in the Service, M. L. Abubakar, said there was the need to look inwards on how to improve the revenue of the states to augment the shortfall of allocations from the Federation Account.
He said that over time, taxation all over the world had always been the most reliable and sustainable source of government revenue if well harnessed and effectively administered.
“For us as a mono-product economy, the reliance on oil revenue in the previous years has exposed our dear country to huge revenue challenges and resulted in poor budget implementation across the three tiers.
“Therefore, proffering solution to these nagging revenue challenges requires a deliberate strategic action plan hence, the need and justification for today’s event.
“Taxation, in most advanced jurisdictions, has gone beyond the bricks-and-mortar model but relies more on data and intelligence which are driven by technology.
“The adoption of technology in revenue administration processes is crucial and a major enabler for enhanced and sustainable revenue generation in a globalised and knowledge driven world.
“Therefore, revenue authorities at all levels must adopt automated processes and embrace e-solutions both in their internal operations and in dealing with the taxpayers within their respective jurisdictions,’’ Nami said.
According to him, FIRS as the country’s leading tax institution, has taken some steps at automating its processes from e-registration, e-filing, e-payment, e-receipt, e-collection and e-TCC, to ensure that it improves on tax collections.
The executive chairman said that there was no better time for the event than now when there was a very pertinent need to shore up revenue in order to meet the budgetary gaps facing the federal and state governments.
He stressed the need to consider e-solutions that would enhance effective taxation of the informal sector which remained a huge source of untapped revenue, the harmonisation of taxpayer database and exchange of information with other stakeholders.
The NGF Director-General, Mr Asishana Okauru, in his remarks said that the lessons of the COVID-19 pandemic pointed to one direction: that all revenue administrations needed to move to a digital future.
Okauru said that digitisation did not only bring about efficiency, but it provided opportunities for more people to be involved.
He identified weak environment for tax policy and low technological integration in tax administration as critical factors undermining efforts to mobilise domestic revenues in Nigeria.
“Specifically for tax authorities, one big lesson that we have learnt is the criticality of internet-based business support systems and payment platforms for the automation of all back-end operational processes and payments across all revenue streams.
“From our research last year, we already know that most contact-intensive taxes are at risk, given the lessons we learnt during the period of the lockdown where taxes collected from contact-intensive taxes fell by an average of 40 per cent across all states in Nigeria.
“Coupled with a weak environment for tax policy and tax legitimacy, low technological integration in tax administration has undermined efforts to mobilise domestic revenues in the country.
“This has undermined the capacity of tax authorities to collect taxes efficiently and the ability of taxpayers to meet their tax responsibilities conveniently.’’
Okauru said that historically, many governments had taken the path of least resistance, maintaining tax systems that allowed them to maximise whatever limited options were available rather than expanding into digital and more efficient tax systems.
“Amidst this transformation, we also recognise risks of data ownership, data protection and cyber security. This, each government must envisage.
“It would require a strong in-house IT team and an experienced legal department that will help protect the interest of all parties, including taxpayers.’’
The NGF director-general noted that the goal of the event was to help facilitate the scale up of modern, taxpayer-friendly, and technology-driven revenue administrations in all states of the federation capable of providing world-class services.
He added that the event was also to facilitate technology-driven revenue administrations in states characterised by efficient, paperless operations, and equipped with ICT-enabled risk-based enforcement capable of optimising their revenue mobilisation strategies.
Okauru pledged that the NGF would continue to do its best to bring such collaborations together to provide opportunities for states to benefit from a global perspective and to ensure that no state was left behind.