Dr Nimbofa Ayawei is the chairman, Bayelsa State Board of Internal Revenue. In this interview with select journalists, he speaks on what the board is doing to shore-up the state’s internally generated revenue among other issues. OSA OKHOMINA was there.
You have been at the helm of affairs at the Bayelsa internal Revenue Board for some years now and your board has remarkably increased the state’s IGR from a paltry N4.45 billion in 2011 to N16.34 billion in 2019. What is the magic?
One of the primary functions of the board of internal revenue is to identify all revenue sources in the state, collect and remit to the government and that is what we have been doing. Of course you know it is a very difficult thing to go after people especially when you are asking for tax. Take for instance yourself, if we pay you your salary and ask you to go home with the total amount and come back and pay your tax component, I am very sure you will never come.
That is how difficult it is to deal with tax payers whether it is individuals or companies. So what we have done is to create a very transparent platform of collecting all revenues and that is why the system is computerised, we have contracted interswitch to look at all the revenue accounts, report at the end of the month, how much money we have generated and because it is transparent, from my iPad I can check every money you have in any of the revenue accounts and the stakeholders like the governor, the deputy governor, the commissioner of finance and all my executive directors in the office can just click and see every detail of the money in that account.
Again because when you allow people to have access to money, there is that temptation to pinch it, there is no exception, that is why in the formal sector, we introduced POS instead of collecting cash and every money in the account is accounted for because from the different platforms, we remit everything to the consolidated account in the state. That has worked for us.
What are the new targets you are setting for yourself?
Just like when we came in, in 2016 and that was the peak of rescission, we generated N7.9 billion, in 2017 we raised it to N12.5 billion and that was the highest so far in the history of Bayelsa State. In 2018 we moved it even further to N13. 6 billion and in 2019 we generated N16.6 billion. Now if you take from 2016 when we came in to 2019, we have already increased the revenue by about 60 per cent but that is not sufficient to move a state like Bayelsa to the next level. It is too small if you compare it with what the sister states are generating. We seriously want to increase the IGR of the state and we are working on that.
What are the challenges your board faces in terms of generating revenue from the Oil producing companies?
When we came in, in 2016 there was a miss-information that from Igbogene down to Yenagoa, we are going to generate over N2 billion yearly. I said this is not feasible. I decided to go down there access every single business entity from Igbogene to Yenagoa. By the time we were through, because we were also charging as little as N3,000 depending on the nature of the business, when we finished the total amount we got from Igbogene to Yenagoa including Amassama came to about N140 million in a whole year.
The essence of that exercise was not that we expected that sector to give us all the money we need, but it is to instill in the businessmen or women the sense of paying tax and to make sure that we just don’t tell agents to go and get this money. We also decided to introduce P O S machines. We spoke with Banks and they gave us terminals, the first six months we were able to collect about 40 per cent of the money, but subsequently, we have been increasing the rate of collection because people are now aware that they are paying their tax to the government and not individuals. Also we introduced prepaid policy.
Only recently the Revenue Mobilisation Allocation and Fiscal Commission declared Bayelsa State insolvent together with Yoba, Taraba, Gombe, Borno, Kebbi and Katsina on the basis of having a low internally generated revenue. However, this classification has been described as being defective and a mere academic exercise by the state government, asserting that by the 2019 data referred to by the report, Bayelsa State IGR of 16.34 billion is 21st higher than 15 other states.
How do you explain this classification?
It is understandable, it is just an academic exercise because it doesn’t mean so much. However, what they simply did was to look at our FAAC collections and did a re-show with the internally generated revenue. Of course the minimum required for a state to be called viable is that the internally generated revenue should be able to found at least 10 per cent of your budget or a reflection of 10 per cent of your FAAC allocation and we are not meeting that. Now the difference between Bayelsa and Yoba is that Yoba get probably very little from FAAC and they are maybe doing N700 million every month or there about, so if you evaluate it, they are doing 10 per cent.
But the truth is it is a wakeup call for us to sit up. It is a call to duty. We need to increase our internally generated revenue now. Rescission will come in cycles maybe in every three years, we can’t get to that point of 12, 13 years ago where our revenue was N30 billion every month, N25 billion, N20 billion. We cannot get to that point probably in the foreseeable future. So we must do the needful to create the infrastructure that will increase the internally generated revenue otherwise, we will remain this way.
If the state is able to pay salaries as at when due, how come it is considered insolvent?
I was actually out of the state when that news came and of course when I returned the first thing I did was to go to the office and demanded for the profile of all the revenue generated in this period and of course you will agree to the fact that we are 21st. So in terms of revenue generation we are not doing badly, but when you compare it to our FAAC because that is the bench mark to our ratio, we are not doing well.
What is wrong in the classification of oil revenue as internally generated revenue why will it be a FAAC revenue?
Because there is a registration that empowers you to get that 13 per cent derivation or any other thing especially 13 per cent component. We can’t decide to put it as internally generated since it is already coming directly from the federal government account. They may not want to consider it as internally generated revenue and if that is the template for every other state, I don’t think there is anything wrong with it, it is for us to move on and get the necessary things that will increase our IGR.
Within the context of the oil producing states, do you think the formula has been far less favorably towards Bayelsa State and why so?
As you know, all the big players in oil industry are all moving into the deep Atlantic Ocean for whatever reason, maybe security, some economic reasons, they are all moving into the Atlantic Ocean and because their offices are not here in Bayelsa, we will be the losers. They will keep going.
Will the coming of the Local Content help in any way?
What will eventually happen is they are going to have some middle level manpower, few persons resident there to represent their various companies, that will not significantly increase our revenue profile.
The fundamental question still remains, what is being done for these oil companies to shift this into the state?
The laws on the land also allows them to do business in your place while operating elsewhere too. What we need to do as a people if we want to maximise the benefits of this industry is to develop a frontier that will attract them.
The Finance Act 2019 became operational on the 1st of February 2020.
What are the implications of the Act in terms of individual taxpayer and tariffs and tax palliatives to businesses? How has it affected the IGR of the state? How is the state benefiting from the new stamp duty regime?
Well, the stamp duty is still a contentious one, because there is a problem between NIPOST and FIRS on who should collect it. But at the end it will be resolved.
For us as a state to help the taxpayers, we have also introduced some measures, we are reducing the rate for some category of businesses and for those companies that have not been able to file their tax returns, we are giving them a longer time to file them because we know that COVID-19 must have affected them.
Is the state doing anything to increase the number of local governments in the state since that is the basis for sharing revenue at FAAC?
That again is not going to be possible in this country as far as it is civilian government, now for a local government to be created, it is a constitutional matter and how many representatives do you have? Who will want an additional local government to be created in Bayelsa and will not want that in their own state? So in the end, it is an exercise in futility so it is not going to be possible, that is the simplest thing, when it comes to Senator, you have three, of course, Senators may actually push for it for more local government areas. The possibility is not even there, so it is not something we should be discussing.