Emily Johnson
Wed, Aug 9, 2023 5:20 PM

Nigeria's Revenue Collection System in Need of Urgent Reform, Says Presidential Committee

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Nigeria's Revenue Collection System in Need of Urgent Reform, Says Presidential Committee
The Presidential Committee on Tax Policy and Fiscal Reforms has recommended that the Nigeria Customs Service and other Ministries, Departments, and Agencies should cease direct revenue collection. Instead, the Federal Inland Revenue Service should handle these responsibilities. The Committee aims to improve the cost-effectiveness of tax collection and the efficiency of the government. This move will lead to greater transparency and accountability in revenue management and help alleviate Nigeria's reliance on borrowing for public spending.

The Nigeria Customs Service and 62 other Ministries, Departments, and Agencies (MDAs) have been urged to cease direct collection of revenue from Nigerians. The recommendation comes from the Presidential Committee on Tax Policy and Fiscal Reforms, chaired by Taiwo Oyedele. According to Oyedele, the Federal Inland Revenue Service (FIRS) should be solely responsible for revenue collection on behalf of the government.

In an interview with Channels Television's Sunrise Daily breakfast programme, Oyedele highlighted the high cost of tax collection in Nigeria. Despite this, the country's revenue collection from taxes is among the lowest in the world. To address this issue and improve efficiency, 63 MDAs were given revenue targets in the 2023 budget. However, Oyedele argues that revenue collection distracts these agencies from their core functions.

The recommendation to centralize revenue collection within the FIRS aims to achieve several objectives. Firstly, it will enhance cost-effectiveness by eliminating duplicate collection efforts across multiple MDAs. Secondly, it will allow these agencies to focus on their primary mandates without the burden of revenue collection. This approach will not only benefit the agencies but also contribute to overall economic growth.

Oyedele emphasized that agencies like the Nigeria Customs Service and the Nigerian Communications Commission (NCC) should concentrate on trade facilitation and telecommunications regulation, respectively. They are not originally established for revenue collection, but it can be delegated to the FIRS without compromising transparency. By consolidating revenue collection, the government can ensure proper accountability and monitor the allocation of funds.

The move towards streamlining revenue collection aligns with President Bola Tinubu's commitment to minimizing Nigeria's reliance on borrowing for public spending. The president recognizes the burden that debt servicing places on limited government revenues. By improving tax policy and fiscal reforms, the government aims to generate more revenue internally and reduce the need for extensive borrowing.

The inauguration of the Presidential Committee on Fiscal Policy and Tax Reforms serves as an essential step towards achieving this goal. The committee will develop strategies and recommendations for improving Nigeria's revenue collection system. It will assess existing policies, identify gaps, and propose effective solutions to enhance efficiency and transparency.

The proposed reform of revenue collection has the potential to transform Nigeria's fiscal landscape. By centralizing revenue collection within the FIRS, the government can optimize resources and drive economic growth. The improved transparency and accountability in revenue management will restore public trust and confidence. Ultimately, this reform will enable Nigeria to reduce its reliance on borrowing and pave the way for sustainable development.

Source of content: OOO News 2023-08-09 News

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