As the massive influx of people continued unabated into the nation’s capital on daily basis, there has been serious concern over the burden placed on the infrastructure in the city, which has made cross sections of residents call on the minister of FCT, Malam Muhammad Bello to act fast before cities gradually become modern slums.
The administration which has in the past admitted a shortage of funds to provide more infrastructure and also to maintain the existing ones believes that with tax compliance, it would be easy to provide public infrastructure and services, and the issue of insecurity would be tackled headlong, as the security of the city borders would be guaranteed, while the money can also be channeled into purchases of security equipment for personnel, and defense research and development would improve.
The FCTA in its quest to improve on the IGR and boost tax refunds in the territory, through the Federal Capital Territory Internal Revenue Service (FCT-IRS) organised a tax seminar on Reviving the Culture of Filing Tax Returns in the territory, to ensure that there is serious compliance with the payment of taxes.
The acting executive chairman FCT-IRS, Haruna Abdullahi, during the seminar, explained that the Services’ ability to collect taxes is central to improving the quality of life of the citizens of FCT in terms of social services such as health and education, critical infrastructures like electricity, good roads, and other public goods.
“Our collective efforts in improving the level of compliance can facilitate the growth and development of the FCT, making it the most enviable city in Africa. The need to revive the culture of filing tax returns cannot be overemphasized as this is critical to providing financing for the government to deliver public services that are vital to sustainable development in the FCT.
“Before the enactment of the Federal Capital Territory Internal Revenue Service (FCT-IRS) Act in 2015, the assessment, collection, and accounting of Personal Income Tax (PIT), Capital Gains Tax (CGT), Withholding Tax (WHT), and Stamp Duties were vested in the Federal Inland Revenue Service (FIRS).
“The bulk of revenue assessed and collected by the FIRS happens to be the Company Income Taxes (CIT), Petroleum Profit Taxes (PPT), and Value Added Taxes (VAT) and the FIRS has over time optimized systems and processes to assess and collect these taxes from corporate entities rather than individuals for which FCT-IRS focuses on.
“At its inception in December 2017, the Service inherited a total of about 10,000 records of individuals registered and issued Taxpayer Identification Numbers (TIN) in the FCT. The Service leveraged existing biometric identity organizations to identify and issue TIN without putting residents of the Territory through the rigors of coming to the tax offices for biometric data capture to issue TINs,” he said.
He explained that so far FCT-IRS has raised the figure of TINs issued from about 10,000 TINs to over 1,200,000 TINs and routinely reminds registered Taxpayers to fulfill their civic responsibility of filing their Tax Returns as required by the law.
“It is instructive to note that residents of the city have continued to file and pay taxes largely when they want to transact business with the authorities. The average number of Taxpayers outside those remitting through the Pay As You Earn (PAYE) scheme has remained in the region of 4,000 with a significant percentage of stop filers.
“From our records, the number of Taxpayers under the PAYE scheme is about 120,000 with half the figure comprising staff of Federal Government Ministries, Departments, and Agencies (MDAs) on the IPPIS platform and those working for the FCTA and the area councils. This implies that 90 percent of the FCT residents registered for TAX do not file their tax returns; meaning only 10 percent of the registered Taxpayers file their tax returns.
“In response to this challenge and to cushion the effect, the Service has introduced the Key Account Managers (KAM) who follow up with taxpayers via one on one basis. However, we are hopeful that this seminar would address the issue of low tax compliance among the residents since the most sustainable source of public finance remains taxes and levies. It is, therefore, prudent that we develop measures to best mobilize our internal resources,” he said.
Abdullahi further said that when the Service took over tax administration in the FCT from the FIRS, the highest amount collected was about N48b, but that in 2021, the Service collected over N100b with an additional N26 billion in recoveries of unremitted With-holding Taxes (WHT).
“This year we intend to increase our collection to N150b and are in good stead to recover some unremitted taxes and levies taking us to a targeted collection figure of N200b. We must not miss the fact that this collection is only coming from the 20 percent of registered Taxpayers in the territory and we believe that with enhanced compliance by the remaining residents, we can easily provide a steady annual tax income of N300 billion to N400 billion making room for high employment, curb low income and provide enhanced services to the residents.
“The Service observed with concern the unethical conduct of some Tax Advisors who routinely encourage Tax Agents to doctor records or flatly refuse to make available documents that are needed to arrive at a fair assessment of taxes due.
“The Service has also observed the worrying trend of engagement of unprofessional consultants by Taxpayers to prepare and file returns with seemingly very wealthy individuals being encouraged to file ridiculously low annual income of N1m to N2m,” he said.
Also, the minister of FCT while speaking at the seminar, said that the responsibility of filing tax returns is very timely, especially as the FCT Administration seeks more ways to shore up its revenue Base for the implementation of various projects, particularly, in the face of dwindling allocations from the federation account.
“It is no secret that the global economic downturn orchestrated largely by the COVID-19 pandemic and our over-reliance on oil export which is being impacted by an unstable international energy market has contributed immensely to a reduction in revenue accruing to the government negatively.
“While l commend the FCT Internal Revenue Service for the Steady growth of revenue accruing from taxation since its establishment, it is also very clear that a lot more needs to be done to optimize this very important source of public finance.
“It is however worrisome that, according to reports reaching me, only 10 percent of registered residents of the FCT are contributing to the maintenance and development of the territory by paying their taxes. This needs to change, both for fairness and entrenchment of the rule of law.
“We must begin to treat tax evasion as the crime that it is. High-income individuals who provide false information on their income should also refrain from doing so,” he said.
Bello further said that one of the canons of taxation is fairness, such that payment of tax is proportional to the income of the person, therefore, tax should be equitable in a way that the amount of tax payable should be proportionate to income.
“The totality of the Internally Generated Revenue (IGR) in the FCT, including other allocation from the Federation Account has supported the FCT in terms of responding positively to social services, such as education, healthcare, and security; and infrastructural development, such as roads, water supply, and other critical developments across the FCT.
“I hereby encourage all residents of the FCT to take the filing of returns as an obligatory and necessary step towards supporting the socio-infrastructural development of FCT.
“We must understand that Taxation is not just a means of providing funds for services and infrastructure, it is also a means for the high earners to contribute to the upliftment of the quality of life of the low earners,” he said.
A retired director, Tax Policy and Legislation, Federal Inland Revenue Service/past president, Chartered Institute of Taxation of Nigeria Chief Mark Anthony Dike (FCTI) while speaking at the seminar, said taxes is what ensures orderliness and protection of the city’s basic and fundamental rights to minimum level of dignity, life and the pursuit of legitimate goals by facilitating infrastructural development.
“Taxes are important for maintenance of government just as our day to day pursuit of resources for our individual and household sustenance. We have always known about the disconnect between GDP and government revenue growth.
“We may well note we are under a progressive tax regime where more wealth may be loosely translated to more tax revenue. Within the period 2013 – 2021, we have had as much oil revenue as non-oil revenue but fortunes of the federation account have not improved considerably,” he said.
Also, a social analyst and economist Mr. Donald Ilobun stressed the need for Nigerians to support the government in ensuring that they comply with tax returns to reduce the burden of providing basic infrastructure for the community on the shoulders of the government.
“People always shy away from discussing taxation because they see it as a means of milking the people of their hard earned resources, but the truth is that it is not so. No country can develop without proper tax policy and complete compliance from the residents or citizens of that country or city,” he said.
