Thursday, 17 September 2015

How Revenue Administration and Taxation REFORMS Improved Tax Collection Significantly.

  1. Problem: An over-reliance on oil, corruption in revenue and tax administration and government’s frequent inability to meet its own terms of the ‘social contract’ meant that there was general unwillingness to pay tax among Nigerians.

    Reform Actions:
    Establishment of Study Group (2002) and Working Group (2003) on the Nigerian Tax System 
    Operational Restructuring of the Federal Inland Revenue Service (FIRS) 
    Nigerian National Tax Policy 
    FIRS Autonomy through the passage of the FIRS Act of 2007 
    Establishment of Tax Appeal Tribunal 
    Establishment of Tax Appeals Tribunal 
    Modernisation of FIRS 
    Stronger Compliance and Enforcement 
    Taxpayer Services, including taxpayer education 
    Entrenching a Strong Ethical Code 
    Automation of Key Processes 
    Capacity Building 
    Domestic and International Cooperation and Collaboration 
    Strategic Performance Management regime
    - Innovative and Proactive Joint Tax Board.

    Main Achievements: The reforms constitute one of the deepest, most comprehensive and most successful reform efforts anywhere in the developing world. Tax collection improved significantly from ₦455 billion in 2000 to ₦4.8 trillion by 2013. Following the reforms, actual collection of ₦3 trillion in 2008 alone was higher than the collection for the previous eight-year period put together. The automation of key processes reduced corruption and abuses, thereby leading to high level of efficiency. Other parastatals should learn from the Federal Inland Revenue Service reforms to improve their performance.

    Key Challenges: (a) many organisations are still not in the tax net, as majority of small businesses pay no tax, with more than 75% of small-scale business operators having the penchant for tax evasion; (b) the tax identification number is yet to be fully operationalised across the country; and (c) until recent reforms to introduce an industry-wide waiver regime, there was a lack of transparency in the operation of the waiver system, which led to loss of government revenue. 

Reference:  Public Service Reforms in Nigeria (1999-2014) - A Comprehensive Review

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