Barring all odds, Babatunde Fowler, the Executive Chairman, of Federal Inland Revenue Services(FIRS) will answer a presidential query issued him by the Chief of Staff to the President, Abba Kyari, demanding explanation on the discrepancy in tax collections for the country between 2015 and 2017.
Aside from asking him to provide a detailed analysis in the variance of the collection between 2015 and 2017, the query also asked him to provide explanation on why the collection in the aforementioned period is less than the one collected between 2014 and 2015, prior to the coming to power of the Muhammadu Buhari-led government.
While one may not pick issues with query which is a routine administrative matter in both the public and private sectors, the manner in which the Fowler query came just when his first term of five years has practically come to an end with the hope that the President will renew his mandate in office going by the excellent performance in increased revenue generation that he has achieved in the last four years providing a progressive template for tax collection in the country leaves a bad taste in the mouth.
All the same, the query leaves much to be desired. By no means this article is not intended to hold forte for Fowler, the man credited with raising the tax profile of Lagos State when he held sway as the state’s chief tax officer in charge of Lagos Internal Revenue Services; the essence of this intervention is to provide some valid background as to why some discrepancies may have existed in the tax collections for the period under review now.
It is an elementary fact in Economics that when an economy undergoes continuous contractions in its Gross Domestic Product(GDP), all the productive sectors of the economy get paralyzed; productivity is in limbo which invariably leads to reduction in tax payment from all taxable entities. Once there is reduction in tax payment, of course, tax collection is endangered.
It’s an irrefutable fact that Nigeria was in severe economic recession between 2015 and 2017. Virtually all the sectors of the economy were negatively affected leading to several losses of jobs. Some companies, most especially those operating within the domain of small and medium enterprises even packed up because of the severity of the recession.
If there were job losses with companies closing operations in the country, it is no brainer therefore that there would be reduction in tax payment. Only those employed with taxable income can pay tax. The tax generating strategy of FIRS under the leadership of Fowler, no matter how brilliant it might have been, could not have performed wonders when there was economic recession. Where are the businesses to taxes in a depressed economy.
The variance in tax collection between 2015 and 2017 on one hand, and between 2014 and 2015 can be narrowed down to the recession that characterized the later as against the former when the economy was a bit okay though not at optimal level. More so, the oil production/oil revenue was negatively affected thanks to Niger Delta crises at the time/drop in oil price .
Note that he was appointed at the end of August 2015. And I remember vividly that within this same year FIRS had 3 executive Chairmen- Mr Ogungbesan, Alh Mashi and Mr Fowler. In this same period there were transfers and staff redeployment within the service. How could such instability yield a positive revenue growth?
Like I stated from the outset, Fowler is competent enough to provide explanations on the issues highlighted in the query. Nevertheless, there is consensus among industry experts that he has done an essentially good job as the country’s chief tax officer by blocking leakages, accommodating more taxable Nigerians within the tax dragnet without necessarily creating any tax burden on the populace, strategic thinking/innovation, etc.
Is it about the deployment of technology to process tax or the near-complete automation of the entire tax architecture thus eliminating human to human contact which sometimes can trigger corruption, among several notable innovations? As they say, one good turn deserves another. President Buhari definitely needs Fowler for the next four years to sustain and build on the successes recorded so far.
Dayo Williams writes from Abuja.