The Revenue Mobilization Allocation and Fiscal Commission (RMAFC) has advocated that the cost of collection received by revenue-generating agencies should henceforth be tied to their performance as a way of increasing revenue generation and remittances.
This advice was contained in a statement by the RMAFC Chairman, Mr. Mohammed Bello Shehu, where he gave highlights of the payment of the cost of collection to revenue-generating agencies from the Federation Account component.
He explained that such a move would further encourage Revenue Generating Agencies (RGAs) to devise new strategies for enhancing revenue generation and remittances to increase the cost of collection.
“We strongly advocate that payment of the cost of collection to RGAs should be tied to revenue performance. In other words, each RGA should receive a cost of collection commensurate with the revenue generated against its revenue target, as provided for in the Appropriation Act.”
It was further revealed that the Federal Inland Revenue Service (FIRS) received the sum of N115,228,307,052.31 and N3,470,427,738.60 as the cost of collection on PPT/CIT and EMTL collections, respectively, within the period.
However, the sum of N86,760,693,465.01 was realised from the Electronic Money Transfer Levy (EMTL).
On VAT, the FIRS/NCS received the sum of N85,664,470,191.68 as cost of collection in the same period, while the sum of N6,758,915,398.08 was paid in the month of July 2023 as cancellation of tax credit from VAT.
From the Federation Account component, the NCS received the sum of N85,177,449,804.12 as the cost of collection for the period. Equally, the NUPRC received the sum of N62,758,464,676.03 as the cost of collection for the period.
Similarly, the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) received a refund of N82,918,505,581.80 and another N25,442,219,048.35.
This money was collected by NUPRC as a penalty for gas flared. Revenues on gas flared penalty used to be Federation Account revenues before the PIA, 2021, which provided that such revenues should be paid 100% to the NMDPRA.
Speaking of revenue performances by the RGAs, the RMAFC Boss commended the agencies for meeting their monthly revenue targets, where FIRS performed creditably well by achieving 206%, 149%, and 105% in the months of June, July, and August 2023, which represent peak periods when companies file their tax returns, as opposed to its average performance in the months of February, April, and October 2023 with 66%, 57%, and 60%, respectively.
Similarly, NUPRC surpassed its monthly revenue target in only three months of September, October, and November 2023 while performing below average in other months, specifically in February and May 2023 with 37% and 31% collection, respectively, just as the Nigeria Custom Service equally exceeded its revenue target in only two months, August and October 2023, while performing averagely in other months. However, in February and April 2023, it achieved only 57% and 52% of the revenue collection, respectively.
On its part, the Ministry of Mines & Steel Development exceeded its monthly revenue targets in almost all months except April, August, and September 2023, where it achieved 98%, 97%, and 96%, respectively, recording a whopping 496% in the month of July 2023.
“Given its superlative performance, the government should give emphasis to the solid minerals sector to improve revenue generation therefrom and further achieve economic diversification.”
“In the area of VAT collection, a significant increase was recorded in the second half, with a collection of N2.148 trillion compared to N1.491 trillion realised in the first half of the year. This has shown an increase of N657 billion, or 30.58%”.
There was a marginal increase in the revenue collected from the Electronic Money Transfer Levy (EMTL). The revenue realised in the second half was N86.761 billion, compared to N83.024 billion in the first half of the year. This has shown a revenue increase of N3.737 billion, or 4.31%.
In a related development, RMAFC decries the practice by some revenue-generating agencies of financing ‘FGN Priority Projects’, insisting that all NNPCL JV PPT should be paid to the Federation Account through FIRS, i.e., such taxes should not be retained by the company in the name of financing FGN priority projects. “No further deduction should be made by FIRS in the name of ‘priority projects’ to avoid a repeat of the situation under NNPC where large chunks of funds were deducted as first-line charges under a similar name, i.e., ‘NNPC priority projects.’ NNPCL should be made to promptly remit all revenues due to the Federation Account as and when due, in compliance with the provisions of the PIA, 2021”.
The RMAFC Chairman observed that, at the moment, the Nigerian economy requires some pragmatic measures to bring it back on track to achieve the desired development and growth. “In this respect, the Commission will continue to provide such periodic reviews on the Federation Account and wishes to appeal to the Government to support the Commission in its quest to block all revenue leakages and enhance the revenues of the 3-tiers of government as part of its function stipulated in the 1999 Constitution of the Federal Republic of Nigeria (as amended)”.
The Commission wholeheartedly supports the Renewed Hope Agenda of President Bola Ahmed Tinubu, GCFR, as encapsulated in the Report of the Policy Advisory Council set up to support the delivery of sustainable and inclusive economic growth by the administration.
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