After the recent announcement by Federal Inland Revenue Service (FIRS) that the president, vice president, governors and their deputies would have to pay tax on their income based on the Amended Personal Income Tax Act, the agency has stated that all states of the federation have potentials to survive on Internally Generated Revenue and taxation if the right parameters are set out for them.
The Chairman of Federal Inland Revenue Service (FIRS) Ifueko Omoigui Okauru stated this in a recent interaction with the media. She explained that “every state of the federation without exception has potentials to generate higher tax income from people engaged in their areas of jurisdictions if only government can identify who the tax payers are and what their businesses are.”
Mrs. Omoigui-Okauru added that “most of them don’t have a comprehensive data on who should pay tax or the key economic activities that can generate tax income. This has always affected the revenue flow from internally generated sources.”
FIRS boss later told the Economic Confidential that the major pitfall of the current tax law which had also militated against effective tax administration over the last 18 years was that Nigeria as a nation has no good tax base making it difficult to identify activities that can be taxed in any given financial year, stressing that if there is no tax base, it means that there is nothing to be taxed.
She argued that “if your citizens don’t have good income, your tax returns will be low. If you don’t have good and vibrant informal sector, your tax return will be low and if companies are not coming into your economy, your tax income will also be low.”
The national taxation database she pointed out would provide a platform for automation of tax administration and other activities that the government would want to do going forward, stressing that the new law was about personal incomes part of its strategies to expand the scope of Nigeria tax base the Federal Government has hinted it was developing a national taxation database for the entire country.
Okauru who stated that the President Goodluck Jonathan administration believes that the ongoing tax reform initiative would enable the country enhance its tax revenue potentials and expand the scope of Nigeria tax base.
When fully operational the law would bring operators from the informal sector into the national tax net, while instituting stiffer sanctions against tax evasion by anybody irrespective of whatever position he occupies.