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Nigeria can realise N6.7tr yearly from VAT, says ANAN – The Nation

VALUE ADDED TAX red Rubber Stamp

If the administration of Value Added Tax (VAT) is decentralised to allow states administer tax law, Nigeria can realise average total revenue of N560 billion monthly.

This is an equivalent of N6.7 trillion yearly, at the five per cent VAT rate, founding President, Association of National Accountants of Nigeria (ANAN), Mr. Omoba Olumuyiwa Sosanya, has said.

He said the VAT generated by the Federal Inland Revenue Service (FIRS) is about N58 billion monthly, pointing out that revenue accruable from VAT could increase 10 times if states are authorised to collect VAT with FIRS.

Sosonya said decentralising VAT administration would capture the informal sector, which is over 85 per cent of the economy into the VAT net. “If our economy must reduce its dependence on oil money, the time has come to reform the tax system and other sources of revenue generation,” he said.

Sosonya, who spoke during The Nation’s First National Economic Forum in Lagos, said while VAT has brought fortunes to most developed countries and some African countries, such as South Africa and Ghana, “the FIRS is overwhelmed and struggling to find its bearing to turn the administration of VAT into goldmine for Nigerians”.

He said while South African Revenue Service (SARS) realised R813.8 billion (about N12.5 trillion) in the 2012/2013 fiscal year, Nigeria’s FIRS realised a meagre N861 billion in 2014.

He regretted that while the funding of Britain’s economy depends mainly on revenue generated from taxes and customs duties, the Nigerian experience is that most revenues generated end up into the private pockets of government officials instead of government coffer.

Sosonya, therefore, sought the separation of tax and other revenue generation from the Ministry of Finance and a new Ministry of Taxation and Revenue created to handle such matters. This, he said, would make room for proper fiscal transformation and effective management of taxation and other revenue generation.

He pointed out that the creation of the new ministry was part of the recommendations of Dr. Pius Okigbo’s Task Force on Tax Administration set up in 1978 and implemented by Alhaji Shehu Shagari administration in 1979. “In the UK, there is Secretary for Treasury who is responsible for taxation and allied matters,” he added.

He also said the Lagos State government has benefited from the increase of its Internally Generated Revenue (IGR) since the appointment of a Special Adviser on Taxation and Revenue in 2007.

The ANAN founding chief also canvassed the appointment of seasoned professionals as consultants to lay proper foundation for the implementation of the tax reforms over a period of time. “Civil servants should not be mandated to implement these reforms,” he added.

Source: The Nation