Don’t Depend on Federation Account- FIRS Boss Cautions States

FIRSbossState Governors barely a month old in the saddle, got an admonition that they should institute some fiscal restraint in their expenditure and should not depend on monthly federal allocation from the centre for the realization of their campaign promises.

The Executive Chairman, Federal Inland Revenue Service (FIRS), Ifueko Omoigui Okauru said state governors should grow states Internally Generated Revenue, IGR, by paying closer attention to revenue spinners often neglected by most states and automate their processes by voting for electronic mode of payment and by resisting the temptation of anticipatory spending.

Omoigui Okauru, who spokeat a strategy retreat organized by the Kwara state government, noted too that states could grow IGR by focusing on priority sectors to attract investment: agriculture, tourism, sports, manufacturing and by low risk investment of Government funds in high yield areas of the economy – oil and gas, hospitality, telecommunications as well as the creative economy:(arts and entertainment).

According to the FIRS Chairman, states should also “tie expenditure to available funds and should not spend what you don’t have. Expenditure should be linked to revenue generation. And this should not be an end, but a means to an end.”

In suggesting that states could consider taxation as an alternative means of generating revenue, Omoigui admonished state governors to live by example, with the “Governor as head of tax administration in the State, Ministry of Finance, State Executive Council, State, House of Assembly, Judiciary, tax payers etc all being an integral part of the tax system, by paying their taxes as and when due.

States, she suggested, could make taxation pivot of revenue generation, by maximizing current sources of taxation – PAYE (Pay As You Earn), open up new sources of taxation, by sourcing taxes from non-employee personal income tax, focusing on high net worth individuals, self employed business people, informal sector, Capital Gains Tax, Stamp Duties, other taxes, levies and fees collectible by the State.

States, she observed, could also pay attention to other sources being currently neglected, identify and eradicate points of diversion and other leakages of tax and other internally generated revenue – through use of electronic and automated payment systems.

In growing IGR, the FIRS Chairman, admonished states to plug leakages in their revenue generation administration by strengthening tax administration at State and Local Government levels, by granting autonomy to tax authorities, automation of tax systems and processes, increasing funding to tax authorities, professionalisation, training and incentivisation of tax officials (reward and recognition).

Outside growing their own states’ IGR, Omoigui admonished states, against the perception of federally collected revenue as “their fund”, that is something which belongs to the federal Government, but “seeing federally allocated revenue as yours” (states’).

She asked states to show more interest in collaborating with the FIRS and the federal ministry of Finance in baking a bigger cake, in the debate on the Revenue Allocation Formula, in amendments to Federal Tax Laws, in the understanding and addressing issues of tax expenditure and the use of the Joint Tax Board and the Unique- Taxpayer Identification Number as a major lever of change for growing IGR.

Other suggestions by the FIRS Chairman, were that states could consider opening up the local economy to Direct Foreign Investment (Foreign) and Direct Local Investment (DLI), improvement of infrastructure and processes required by investors and businesses, tackling corruption and other unethical practices and protection of local businesses, while providing incentives to foreign investment.

States could also identify and focus on priority sectors to attract investment: agriculture, tourism, sports, manufacturing and carry out structured and low risk investment of Government funds in high yield areas of the economy – oil and gas, hospitality, telecommunications as well as the creative economy:(arts, entertainment) etc, the FIRS Chairman, said.

Kwara state governor, Alhaji Abdulfatah Ahmed in his opening remarks, tasked the leading lights in his government to think outside the box so that the retreat, will emerge with workable action plan that will enable his administration confront challenges, grow revenue and make its people happy.

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