LAGOS, Nigeria (VOICE OF NAIJA)-The Presidential Fiscal Policy and Tax Reform Committee has proposed a cost reduction measure, which, if approved by the Federal Government, will allow all revenue-generating agencies to earn one percent of the revenue they generate.
The agencies most affected by the proposed changes include the Federal Inland Revenue Service (FIRS), which currently receives four percent as a cost of collection; the Nigeria Customs Service (NCS), which receives seven percent; and the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), which receives five percent.
Chairman of the Presidential Fiscal Policy and Tax Reform Committee, Mr. Taiwo Oyedele revealed this during a public consultation workshop for reporters and public commentators in Abuja yesterday.
Oyedele emphasized the importance of reducing the cost of revenue collection to one percent to align with international best practices.
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Currently, the cost of collection in Nigeria varies from a few percent to over 30 percent.
Oyedele said: āIf an agency cannot collect revenue at one per cent, it should not be collecting it at all. This reform aims at ensuring that the government agencies focus on their primary functions rather than duplicating tax collection efforts.
āWe are serious with the one per cent and it should cut across everybody, if you cannot collect revenue with one per cent, then you should not be collecting it at all thatās why we were saying let government agencies focus on the primary reason they were set up for.
āIf they are not set up to collect tax they canāt be efficient and competent in doing it, things will work better if everybody plays to their strength thereās a reason why every country has their revenue collection agency and not to replicate that function and be expecting that everything will be fine. A country like South Africa is under one per cent.ā
Oyedele stated that the committee also aims to overhaul the Federation Account Allocation Committee (FAAC) disbursement process.
The panel is recommending that disbursements to the three tiers of government be changed from a monthly to a daily schedule.
Currently, FAAC convenes monthly to distribute funds from the Federation Accounts to the federal, state, and local government levels.
Describing the approach as outdated, akin to practices from 1814, Oyedele expressed, āWe believe the system can be configured to credit the accounts of local, state, and federal governments daily.