Nigeria Customs, JTB and Efficient Tax Management, by Abdulsalam Mahmud

Nigeria Customs, JTB and Efficient Tax Management, by Abdulsalam Mahmud

One of the ways a nation or sub-national entities generate revenue to execute developmental projects is through tax collection. In Nigeria however, the issue of effective collection of tax by the government, in particular, is still a problem.

Some of the challenges affecting the country’s tax system include multiplicity of taxes, bad administration, non-availability of database, tax touting, complex nature of the Nigerian tax laws, minimum tax, commencement, change of accounting date and cessation, and non-payment of tax refunds.

Indeed, the collection of tax has many benefits. Taxation is a significant source of revenue for the government. Money or revenue accruing from tax collection is used in running the cost of governance. Again, the government is able to build critical social infrastructures, through the taxes payed by citizens and organizations.

Many countries, according to an online research article, have the potential to increase their tax-to-GDP ratios—enabling them to provide critical government services—by as much as 9 percentage points through better tax design and stronger public institutions.

“Making use of this potential would also contribute to financial development and private sector entrepreneurship. Easier financing, in turn, together with efficient and well-targeted spending, including to strengthen social safety nets, would go a long way toward delivering sustainable development,” the piece noted.

Nigeria unfortunately, is among the countries of the world yet to leverage on its tax system to advance its national development course. According to a media report, Nigeria, with its large economy, population and the several taxes and levies different levels of government collect, should not be battling low revenue.

Sadly, and owing to poor tax administration, unchecked tax evasion, failure to deploy technology for appropriate assessment, wasteful spending, unremitted taxes and levies by MDAs and the lack of political will to ensure all funds are remitted and tax evaders dealt with appropriately, the government relies on borrowing to survive.

The report further noted that the Joint Tax Board, the federal, state and local governments collect no fewer than 51 taxes and levies. Its Executive Secretary, Joint Tax Board, Mrs Nana-Aisha Obomegie, at a function in Abuja last year, said, “We have 11 being collected by the Federal Government, 19 by the states while the local governments have about 21. Sadly, however, these have yet to translate to increased revenue for the respective governments”.

Apparently worried by the thorny issues confronting our tax management system, the Nigeria Customs Service, NCS, and JTB, have taken a bold step to change the appalling narrative.

Following the meeting held on the 16 of January 2024 between the Customs Service and JTB, the Comptroller-General of Customs, Bashir Adewale Adeniyi, on Monday, 18 March 2024, signed a memorandum of understanding (MOU) with the Tax Board at the NCS headquarters in Abuja.

The MOU was signed during a courtesy visit by the Secretary of JTB, Olusegun Adesokan, to the Nigeria Customs Headquarters. Adesokan’s visit was aimed at fostering collaboration and enhance effective tax management in the country.

Adeniyi, while emphasizing the collective efforts invested in finalising the MOU, said: “The purpose of signing the MOU is to strengthen and enrich strategic collaboration towards fostering a vibrant economy for the country. Consequently, it aims to lay a foundation for future endeavours and integrate fiscal policies to enhance data facilitation”.

In his remarks, Adesokan, extended his deepest appreciation to CGC Adeniyi and the Customs Service. He noted, “As a result of this, the meeting on the 16th of January has indeed reached a milestone. I commend the team for their foresight that led to the successful signing of the MOU.”

Casting aside the Customs-JTB MoU event, it is imperative that Nigeria builds effectively, its tax capacity. For that to be achieved, the federal government will need to take a holistic and institution-based approach that focuses on leveraging core domestic tax policies.

The first is by improving the design and administration of the nation’s core domestic taxes—value-added taxes, excises, personal income taxes, and corporate income taxes. VAT revenue, likewise could be doubled by limiting preferential treatments, while improving compliance without increasing standard tax rates.

Another thing the government should prioritize is the implementation of bold reform plans, focusing on tax base broadening through the rationalization of tax expenditures, more neutral taxation of capital income, and better use of property taxes.

Above all, institutions like JTB and the Federal Inland Revenue Service, FIRS, together with NCS and several others – managing the country’s tax system and reform – deserve continuous government support for them to adequately discharge their statutory obligations of generating tax revenues.

Mahmud is the Deputy Editor of PRNigeria.