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Internally Generated Revenue: State Governors Target N1.1 Trillion IGR

Published by Nairaland on Fri, 15 Jul 2016

States in Nigeria have started making aggressive efforts to shore up their Internally Generated Revenue (IGR) for 2016, due to the country's dwindling income from oil proceeds.LEADERSHIP's findings show that 22 states in the federation have projected to earn N1.1 trillion in IGR, to fund projects in their states. Most of the states plan to generate revenue by widening their tax nets, blocking avenues for revenue leakage, investing in agriculture and solid minerals among others.The 36 states of the country generated a total of N682.7 billion IGR in 2015, a decline of N25.18 billion from the N707.9 billion they generated in 2014.Figures obtained by LEADERSHIP across the states indicate that Lagos State, which generated the highest revenue in the 2015 fiscal year with an IGR of N268 billion, has projected to earn N300 billion through the state internal revenue service in the 2016 fiscal year. Rivers state is second on the list of states with the highest IGR projections for the fiscal year, with a target of N120 billion, while Ogun has a projection of N108 billion.From the northern part of the country, Kano State tops the chart with an ambitious target of N60 billion. This has been described as a tall dream for the state which generated N13.611 billion in 2015, compared to N13.661 billion it generated in 2014. Also from the northern part of the country is Kaduna State with a projection of N45 billion for the 2016 fiscal year.Others include Delta State, N75 billion; Oyo State N76.7 billion; Sokoto State NN33 billion; Kwara State N32 billion; Borno State N28 billion; Anambra State, N26 billion; Kasina State N26.3 billion; Ebonyi State, N26billion; Abia State N24 billion; Plateau State, N13.5 billion; Niger State N15.7 billion; Nasarawa State N8.92 billion and Enugu State, N8.4 billion.Bayelsa, Taraba and Adamawa project to earn N7.2 billion, N5.3 billion and N3 billion respectively.The feelers from the states indicate that many of them are embarking on these pursuits as it has become necessary for them to improve on their IGR and reduce their dependency on the monthly allocation from the Federation Account.LEADERSHIP recalls that the precarious financial situation in many states in the country has made the governments in those states unable to meet obligations such as payment of workers' salaries, in spite of a federal government bailout.It was gathered that 27 states have been finding it difficult to pay the salaries of their workers in spite of the bailout fund they received from the federal government.South-west chairman, of the National Union of Petroleum and Natural Gas, Mr Tokunbo Korodo, recently, urged the various state governments to look inwards and find ways to generate revenue. He further urged them to get serious and stop relying on monthly allocations from the federation account.A recent report by the National Bureau of Statistics (NBS) revealed that in the 2015 fiscal year, the 36 states in the country generated a total of N682.7 billion in IGR, a decline of N25.18 billion from the N707.9 billion they generated in 2014.According to the report, Lagos state generated the highest IGR of N268.2 billion, followed by Rivers state with N82.1 billion, Delta state with N40.8 billion and Ogun state with an impressive improvement of 49.42 per cent. Ogun recorded N34.59 billion in 2015, an increase of N17.09 billion on the N17.49 billion it generated in 2014.However, some states recorded dismal performances in this regard, with their IGR far below 10 per cent of their Federation Account Allocations (FAA) from June 2015 to May 2016. They include Yobe, Zamfara, Ekiti, Borno and Kebbi states.Analysts have stressed the need for states in Nigeria to learn from the Lagos' example. The state generated more than 150 per cent of what it got from the federation account, a feat which no other state in the country has been able to match.Lagos, home to about 2,000 industrial complexes, 10,000 commercial ventures and 22 industrial estates, has enormous potential for economic growth and remains one of the few states in the country that is self-sustaining.Perhaps, a major lesson that could be learnt from Lagos state in IGR is that of setting targets and meeting or surpassing them. For instance, the state government revealed that it generated N101.69 billion in the first quarter of 2016 out of which a surplus of N4.85 billion was realised as against an expected N29.92 billion deficit.The state's commissioner for economic planning and budget, Mr Akinyemi Ashade, said the revenue generated was above that of 2015 which stood at N97.28 billion in the first quarter, adding that in absolute terms, the revenue performance was N4.4 billion more than that of the comparative period of 2015.Over the years, the Lagos State Internal Revenue Service (LIRS), the major revenue generating agency of the state, has recorded phenomenal improvement in the state's IGR, moving it up from a monthly average of about N600 million in 1999 to about N300 billion currently.According to the state, in terms of strategy, it is not satisfied that only about three million residents, out of a taxable adult population of about eight million, pay their taxes. It has, therefore, announced a widening of its tax net to include more groups and individuals. Towards this end, three categories of tax payers, namely market men/women, artisans, micro, small and medium-scale enterprises and domestic staff, have been classified in the sector. They are expected to remit one per cent of their earnings to government's coffers.The government said that in order to ensure optimal success in the new tax system, in addition to the traditional bank portal, new payment platforms, including point-of-sale (POS) machines, online and other electronic multi-modal system had been introduced to make it easier for residents to remit their taxes.All over the country now, states are devising other means of revenue generation as a result of the declining allocations from the federation account. For some states, it is either they are widening their tax nets or encouraging their people to go into agriculture. Most of the states have adopted different strategies to improve their IGR.Sokoto State has demonstrated its determination to improve its IGR with its N14.96 billion budget to the agricultural sector in the 2016 fiscal year. This supersedes the total amount budgeted to the same sector by five other states: Niger, N2.53bn; Kogi, N1.18bn; Plateau, N3.32bn; Taraba N4.2bn, and Adamawa, N1.6bn respectively.According to the Sokoto State governor, Aminu Waziri Tambuwal, the budget is an investment that is expected to, among others, increase the state's IGR and turn the state into a major exporter of agricultural products.Aside this, the state, which recorded N606.6 million increase in 2015 with N6.22 billion in IGR, compared to N5.617 billion in 2014, has also said it was able to shore up its IGR because of its automation and consolidation of revenue collection. The state commissioner of finance, Sa'idu Umar, told journalists recently that all the state government's revenue accounts had been consolidated into a single Consolidated Revenue Account (CRA).He said with the automation and consolidation of the revenue accounts, all the possible areas of leakages had been blocked thereby boosting the state's IGR.In Kaduna state, government is very ambitious in its IGR drive for 2016. Having recorded a drop of 9.75 per cent in its IGR with a N1.245 million drop from the N12.782 billion it generated in 2014 to N11.536 billion, the state has set a target of 'N45 billion as its annual IGR in 2016.The executive chairman of the state Internal Revenue Service (KADIRS), Mallam Muktar Ahmed, explained that N20 billion was targeted to be generated from the MDAs while N25 billion was to be generated from the state's internal services.In order to achieve its set target, the Kaduna State governor, Mallam Nasir Ahmad el-Rufai, has set up a committee headed by Mrs Ifueko Omoigui Okauru, a seasoned tax administrator and onetime executive chairman of the Federal Inland Revenue Service (FIRS), with a mandate to review the tax and revenue generating mechanisms in the state in order to widen the tax net and also collect all potential revenues within the state.In its submitted report, and based on the recommendations of the committee and in recognition of the need for legislative empowerment of the State Board of Internal Revenue, an executive bill known as the Kaduna State Tax (Codification and Consolidation) Law 2016, was sponsored and passed by the Kaduna State House of Assembly and assented to by the governor.Also, as part of efforts to ensure the realisation of its N45 billion IGR target, the Kaduna State government said it would impose tax on petty traders such as those frying beans cake (akara) and vendors of tomatoes and other petty items.In Jigawa State, the government said it would harness all available but untapped potential to increase its IGR. The state's commissioner of finance, budget and economic planning, Alhaji Umar Namadi, stated that the state would look for ways to diversify its sources of income and enhance its IGR.The Kano state government for its part, is utilising both tab and non-tab revenue sources to increase its IGR drive which is currently at only 13 per cent collection. The state's commissioner for finance, Prof Mukhtar Dandago, said that technical experts had been mobilised to assist the state government in generating more revenue. Kano State is said to receive only about N1.5 billion monthly as IGR, which is now said to have dropped to less than N1.3 billion, a situation blamed on lack of training and capacity building for revenue officers in the state.Plateau state, one of the states that recorded a drop in revenue generation last year, compared to the previous year, has revealed that it is making efforts to shore up its IGR this year. Already, the state has generated N2.06 billion as revenue in the first quarter of 2016. Mr Dashe Arlat, the acting chairman, Plateau State Internal Revenue Service (PSIRS), who described the revenue collected within the period as "very encouraging" when compared with the N1.84 billion realised in the corresponding period in 2015, disclosed that the amount generated was made up of N350,720,319 from pay-as-you-earn (PAYE) tax; N982,889,890 direct payment and N711,783,427 remittances.He also attributed the boost in revenue collection to the adoption of the Treasury Single Account (TSA) system which the state keyed into at the beginning of the year as directed by the federal government.The Nasarawa State governor, Umaru Al-Makura, has reiterated the position of the state to focus on agriculture as a means of improving and diversifying the revenue base of the state.In Taraba state, Governor Darius Ishaku, has declared his administration's resolve to continue to diversify the state's sources of income from oil to agriculture, while the Benue state government has reorganised the state's internal revenue body, Benue Internal Revenue Service (BIRS) for optimum performance by reconstituting the board and leadership of the organisation. The government also brought in a tax expert, Mrs Mimi Adzape-Orubibi, who, shortly after her appointment, went to work immediately, with a view to boosting the state's IGR.One of the innovations of the board was the introduction of POS devices in the collection of revenue across the state, coupled with the introduction of a central tax and revenue collection system in the ministries, departments and agencies (MDAs) of the state and the appointment of tax consultants and agents. With the introduction of the POS devices which came with inbuilt receipts, the former practice of issuing manual receipts to tax payers which provided avenue for tax collectors to fleece the government has been effectively eliminated. More so, the haphazard collection of revenue and taxes in the MDAs which before now provided a platform for inherent fraud associated with some government officials has been checked with the central tax and revenue collection system.The Ondo State Board of Internal Revenue (OSBIR) collected N2.3 billion as IGR between January and March 2016 by shifting focus from individual tax payers to corporate organisations. The chairman, OSBIR, Akin Akinsehinwa, disclosed that the shift in focus was as a result of the harsh economic realities in the state which had been worsened by the dwindling resources from the federation account.Enugu State has also been able to increase its 2016 IGR from N450 million to N700 million monthly, due to an improved collection system.Commissioner for finance and economic development, Mrs Eucharia Uche-Offor, said the state was able to achieve this through quality manpower by employing more hands in the IGR departments for its IGR drive.The commissioner said that the state had introduced some financial measures to check revenue leakages and bloated government spending, among them the Treasury Single Account (TSA), streamlined IGR collection and payment of workers' salaries through Bank Verification Number (BVN) as well as the ongoing bio-metric capturing of the state's workforce which would enhance financial discipline and savings in the state.In Anambra state, the government plans to increase its annual IGR from the current N16.8 billion to N26.4 billion in 2016. Special adviser to the governor on economic planning and budget, said the administration would not increase taxes this year but would invest in automation to block leakages in order to ensure that the N2.2 billion paid monthly by people and taxes from businesses are reinvested into the state.As part of efforts to enhance its IGR, Abia State government is considering setting up a mining company to fully exploit the solid minerals potential of the state while the Oyo State government is improving its tax collection, especially by ensuring that people pay property tax on their private buildings, as part of its aggressive IGR drive.Oyo state commissioner for information, culture and tourism, Mr Toye Arulogun, declared that the evaluation and collection of property tax would begin from the private residence of the governor.For its part, the Osun state government recently initiated a campaign urging residents to register their business, in its effort to boost its IGR, to cushion the effects of dwindling allocations from the federation account to states.Acting chairman and chief executive officer of Osun Internal Revenue Service (OIRS), Dayo Oyebanji, said the state government was working towards improving the level of voluntary compliance in the payment of taxes for the growth of the revenue base of the state.When Adams Oshiomhole came in as governor of Edo State, the IGR of the state was hovering between N200 million and N300 million, but the state's IGR on Oshiomhole's watch increased to nearly N2 billion a month. According to sources in the state, the difference was that the state government simply blocked avenues for revenue leakages.LEADERSHIP recalls that the NBS report listed Ogun State, with 49.42 per cent increase, and Anambra, with a rise of 29.3 per cent in its IGR from N10.45 billion in 2014 to N14.79 billion in 2015, as leading states in IGR performance in 2015. Other states that experienced a rise in their IGR from 2014 to 2015 are: Abia (7.33%), Bauchi (10.02%), Borno (21.80%), Edo (10.95%), Kogi (3.05%), Nasarawa (4.59%), Niger (3.98%), Sokoto (9.75%) and Taraba (8.57%).It also named 24 states, which include Kwara, Imo, Bayelsa, Adamawa, Akwa Ibom, Benue, Cross River, Delta, Ekiti, Enugu, Gombe, Jigawa, Kaduna, Kano, Katsina, Kebbi, Lagos, Ondo, Osun, Oyo, Plateau, Rivers, Yobe, and Zamfara as those with decreased IGR in 2015. Ebonyi is the only state whose IGR records were not available.Three states - Kwara (-74%), Imo (-48) and Yobe (-37%) - had the biggest IGR drop between 2014 and 2015.http://allafrica.com/stories/201607110291.html
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