FIRS Boss, Fowler replies Kyari, says recession, oil price affected tax revenue

The recession experienced by the Nigerian economy in
2016 as well as lower oil prices affected the revenue collected by
the Federal Inland Revenue Service (FIRS) between 2015 and 2018,
Tunde Fowler, the chairman, has said.

Despite the challenges, Fowler explained, non-oil revenue such
as VAT and company income tax — which he said are within the
control of FIRS — have been on the increase compared to pre-2015
figures.

But oil-based taxes, such as petroleum profit tax (PPT), are
beyond the control of the service.

He was responding to a memo from Abba
Kyari, the chief of staff to the president,
who said there were significant variances between the budgeted
collections and actual collections for the period 2015 to 2018.

Kyari also said the actual collections for 2015 to 2017
were significantly worse than what was collected between 2012 and
2014.

In the letter dated August 8, 2019, Kyari gave Fowler up till
August 19 to explain the reasons “for the poor collections”.

‘WE GREW NON-OIL REVENUE’

Fowler, who is rounding off his four-year term as FIRS chairman
amid speculations that he will not be re-appointed, explained in
his response that non-oil tax revenue has actually been on the
rise.

He wrote in his response obtained by TheCable: “I refer
to your letter dated 8th August, 2019 on the above subject matter
and hereby submit a comprehensive variance analysis between
budgeted and actual collections for each main tax item for the
period 2012-2018 as requested (see appendix 1).

“Your letter stated that actual collections for a 3-year
period were significantly worse than what was collected between
2012 and 2014. Total actual collection for the said period
wasN14,527.85 trillion, while total actual
collection between 2016 to 2018 was N12,656.30
trillion. The highlight of these collection figures
was that during the period 2012 to 2014, out of
the N14,527.85 trillion, oil revenue
accounted for N8,321.64 trillion or 57.28%
while non-oil accounted for N6,206.22
trillion or 42.72% and during the later period of
2016 to 2018, out of the N12,656.30
trillion, oil revenue accounted
for N5,145.87 trillionor 40.65% and non-oil
revenue accounted N7,510.42 trillion or
59.35%. FIRS management has control of non-oil revenue collection
figures while oil revenue collection figures are subject to more
external forces.”

He wrote: “The non-oil revenue collection grew
by N1,304.20 trillion or 21% within
the period 2016 to 2018.

“Kindly note that the total budget collection figure during
2012 to 2014 stood at N12,190.52
trillion compared to N16,771.78
trillion for the period 2016 to 2018, which represent
an increase of 37.58%.

“Please note that the variance in the budgeted and actual
revenue collection performance of the Service for the period 2016
to 2018 was main attributed to the following
reasons: 

“1. The low inflow of oil revenues for the period especially
Petroleum Profit Tax (PPT) was due to fall in price of crude oil
and reduction of crude oil production. Notwithstanding government
efforts to diversify the economy, oil revenues remains (remain) an
important component of total revenues accruable to the Federation.
The price of crude oil fell from an average of $113.72, $110.98 and
$100.40 per barrel in 2012, 2013 and 2014 to $ 52.65, $43.80 and
$54.08 per barrel in 2015, 2016 and 2017. There was also a
reduction in crude oil production from 2.31mbpd, 2.18mbpd and
2.20mbpd in 2012, 2013 and 2014 to 2.12mbpd, 1.81mbpd and 1.88mbpd
in 2015, 2016 and 2017 respectively.

“2. The Nigerian economy also went into recession in the
second quarter of 2016 which slowed down general economic
activities. Tax revenue collection (CIT and VAT) being a function
of economic activities were negatively affected but actual
collection of the above two taxes were still higher in 2016 to 2018
than in 2012 to 2014. During the years 2012, 2013 and 2014, GDP
grew by 4.3%, 5.4% and 6.3% while in 2015, 2016 and 2017 there was
a decline in growth to 2.7%, -1.6% and 1.9% respectively. The tax
revenue
grew as the economy recovered in the second quarter of
2017.

“3. It is worthy of note that strategies and initiatives
adopted in collection of VAT during the period 2015-2017 led to
approximately 40% increase over 2012-2014 collections. In 2014 the
VAT collected was N802billion, compared to N1.1 trillion in 2018.
This increase is attributable to various initiatives such as ICT
innovations, continuous taxpayer education, taxpayer enlightenment,
etc embarked upon by the Service.

 “4. Furthermore, it is pertinent to note that when
this administration came on board in August 2015, the
target the target for the two major non-oil taxes were
increased by 52% for VAT and 45% for CIT. Notwithstanding the
increase, FIRS has in line with the Federal government’s
revenue base diversification strategy has grown the non-oil tax
collection by over N1.304 trillion (21%) when the total non-oil tax
collection for 2016-2018 is compared to that of 2012-2014.

“I am confident that our current strategies and initiatives
will improve revenue collection and meet the expectations of
government.

“Please accept the assurance of my highest
regards.”

PRESIDENCY: FOWLER NOT UNDER INVESTIGATION

Meanwhile, Garba Shehu, presidential spokesman, has said Fowler
is not under investigation.

In a press statement on Monday afternoon, he said it is
necessary “to state categorically that the Chairman of the Federal
Inland Revenue Service, Babatunde Fowler, is not under any
investigation”.

“The letter from the Chief of Staff to the President, Abba
Kyari, on which the purported rumour of an investigation is based,
merely raises concerns over the negative run of the tax revenue
collection in recent times,” he said.

“Taking a cue from today’s (Monday) presentation of Vice
President Yemi Osinbajo at the Presidential Retreat for
Ministers-Designate, Federal Permanent Secretaries and Top
Government Functionaries , which dwelt on an ‘Overview of the
Policies , Programmes and Project Audit Committee,’ a body he
chaired, projected revenue of government falls behind recurrent
expenditure even without having factored in capital
expenditure.

“Consequently, it would appear that the country might be heading
for a fiscal crisis if urgent steps are not taken to halt the
negative trends in target setting and target realisation in tax
revenue.

“Anyone conversant with Federal Executive Council deliberations
would have observed that issues bordering on revenue form the
number one concern of what Nigeria faces today, and therefore,
often take a prime place in discussions of the body.

“It is noteworthy and highly commendable that under this
administration, the number of taxable adults has increased from 10
million to 20 million with concerted efforts still on-going to
bring a lot more into the tax net.”

Culled from TheCable

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President Buhari Addresses In-Coming Ministers on
NextLevel Agenda

I welcome you all to this meeting whose purpose is firstly, to
familiarize ourselves with our colleagues with whom we shall be
working closely for the next four years GOD willing; secondly, to
reflect and assess the country’s position in 2015 and today; and
thirdly, to chart a course for the country for the foreseeable
future.

2. I congratulate all the new comers who your country has chosen
above others to join the first term Ministers whose performance has
been outstanding. All of you are appointed to assist and advise the
President in running the affairs of our country. At the end of the
Retreat, it is hoped that all of you will be in tune with the roles
and responsibilities of positions you will occupy in Government.
Many national issues require unified decisions.

3. It is a great privilege for you to be called upon to serve in
these Great Offices of State and you must grasp the chance with two
hands and put in your best efforts as Nigeria today needs top
managers to handle our numerous challenges. There will be long
hours and you must be prepared to live laborious days if we are to
serve our people optimally.

4. Ladies and gentlemen, we are all aware of the looming
demographic potential of our country. By average estimates, our
population is close to 200 million today. By 2050, UN estimates put
Nigeria third globally behind only India and China with our
projected population at 411 million.

5. This is a frightening prospect but only if we sit idly by and
expect handouts from so-called development partners. The solution
to our problems lies within us.

6. Honourable Ministers-Designate, in our first term we
identified three salient areas for close attention and action,
namely to secure the country, to improve the economy and to fight
corruption.

7. None but the most partisan will dispute that we have made
headway in all three areas:

First – we have rolled back the frontiers of terrorism; we are
actively addressing other challenges such as kidnappings,
farmer-herder violence, improving the safety of our roads,
railways, air traffic and fire control capacities.

Second – we are steadily turning the economy round through
investment in agriculture and manufacturing, shoring up our foreign
reserves, curbing inflation and improving the country’s
infrastructure.

Third – on corruption, we have recovered hundreds of billions of
stolen assets and are actively pursuing control measures to tackle
leakages in public resources. We will not let up in fighting
corruption.

8. As Ministers, I am counting on you together with Advisers and
Nigerians willing and able to contribute to build upon our road map
of policies, programmes and projects that will lift the bulk of our
people out of poverty and set them on the road to prosperity.

9. Our Administration’s eight years will have laid the grounds
for lifting 100 million Nigerians out of poverty in 10 years. This
outcome will fundamentally shift Nigeria’s trajectory and place us
among the World’s Great Nations.

11. Honourable Ministers-Designate, you will be responsible for
the development and implementation of policies, programmes and
projects in your various Ministries, Departments and Agencies in
line with Government priorities. You must also ensure that Agencies
under your Ministries are effective, efficient and accountable in
the discharge of their responsibilities.

12. Honourable Ministers-Designate, we must work as a team.
Although you have been chosen to represent your states as a
constitutional imperative, it is vital for all of you to work as
Nigerians.

13. Furthermore, working as a team demands that we know what the
next person is doing. You must open communications with your
colleagues. Lack of communication leads to lack of cooperation and
sub-optimal performance.

14. Finally, although this is called a Retreat, I would like to
think this is a preparation for an advance to the Next Level. Thank
you ladies and gentlemen. I wish you fruitful deliberations.

Muhammadu Buhari
President