The collapse of the aviation and maritime sectors loom as President Bola Tinubu planned to strip key regulatory agencies of their revenue collection functions, thereby, threatening their operations
Although many have expressed reserve over the proposed renaming of the Federal Inland Revenue Service (FIRS) by President Bola Tinubu on the excuse that they do not have enough facts to opinionated on the matter, a few others who spoke with our Correspondent on the topic said the move could have several implications for fiscal matters in Nigeria, particularly concerning tax administration and the balance of power between federal and subnational governments.
For instance, while the core function of the Nigerian Ports Authority (NPA) was to develop new ports, dredge and maintain the channels, the Nigerian Marítime Administration and Safety Agency (NIMASA), was to develop indigenous shipping and ensure a safer shipping sector.
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Also, the Nigerian Civil Aviation Authority (NCAA), was established to ensure regulating, monitoring and promotion of the safety, security, economic and reliability of air navigation oversight in line with International Civil Aviation organisation (ICAO) standard and recommended practices (SARPs).
The Nigerian Airspace Management Agency (NAMA), is responsible for the provision of air navigation services to ensure safe, efficient, expeditious and economic flight operations.
Experts, however, warned that these agencies are regulatory and not revenue generating and stripping of their revenue functions will affect discharging their core mandates.
LEADERSHIP reports that President Tinubu has sent a ln executive bill to the National Assembly titled the Nigeria Revenue Service (Establishment) Bill to repeal the Federal Inland Revenue Service (Establishment) Act, No. 13, 2007, and establish the Nigeria Revenue Service.
According to Tinubu, the new agency will be responsible for assessing, collecting, and accounting for revenue accruing to the government.
This new law will expunge the revenue collection function from 62 revenue-generating agencies and transfer the responsibility of revenue collection to a single agency for what the government termed efficiency in revenue collection.
Some of the agencies aside NPA, NAMA, NIMASA and NCAA are, include Federal Airports Authority of Nigeria (FAAN), Federal Inland Revenue Service(FIRS), are the Bank of Agriculture(NBN), Nigerian Bulk Electricity Trading (NBET), Tertiary Education Trust Fund (TETFUND), Federal Radio Corporation of Nigeria (FRCN), Nigerian Railway Corporation (NRC), Federal Reporting Council of Nigeria (FRCN), Standards Organisation of Nigeria (SON).
Others are, Nigeria Deposit Insurance Corporation(NDIC), Nigerian Meteorological Agency (NIMET), National Agency for Food and Drug Administration and Control (NAFDAC), Federal Road Safety Corps (FRSC), Nigeria Customs Service (NCS), Corporate Affairs Commission (CAC), Nigeria Civil Aviation Authority(NCAA), National Broadcasting Commission(NBC) and Joint Admission Matriculation Board (JAMB).
However, sources in some of the agencies have turned down the initiative saying lots of revenue will be lost by the government instead of being maximised.
Others also argued that operations of some of the affected agencies would be paralysed due to inability to make funds available for immediate remedial work.
According to sources who craved anonymity because of the sensitivity of the discourse, said technical agencies such as NIMASA, NPA, NCAA, NIMET, NAMA, among others, will have their operations affected by the pressure planned decision.
They argued further the wheel of operation among the agencies will be slow, and revenue generation will be nosedive.
Giving an instance, a source in the NCAA, said currently, the agencies in the nation’s aviation agencies are groaning under the 50 percent revenue deduction by the federal government from revenue generated by the agency, “how will they survive when they are asked to hand off revenue generation? I hope planes won’t start falling off from the skies?,” he asked rhetorically.
He continued, “revenue collection is based on technicalities and training, how soon will they get to understand the system?” He asked. He continued, “the government should expect to lose half of the revenue these agencies are generating because it will become frustrating for trained revenue officers and officials in the mentioned agencies. For instance, how do I collect revenue and give it out to another government body? And, they shouldn’t expect to know the rudiment of revenue collection.”
“So, how will these agencies attend through operational issues that need emergency funds to rectify? Operation will suffer under this planned arrangement,” he stated.
Another source in the Nigerian Ports Authority (NPA), had queried how operational functions of the authority would be carried out.
According to him, the two per cent capital project fund has never for once been released by the federal government, so, how will they now fund this critical government agency when there is an emergency need
He predicted that it will be difficult for the agencies to operate because of bureaucracy in getting funds released by the government.
“If there is no fund to oil the machinery of the agency, how will they function? What happened to Capital and maintenance dredging function of NPA? It will be difficult for NPA to carry out their operation,” he stated.
He continued, “their functions will be threatened, though the government is particular about mopping up funds but this initiative isn’t different from the Treasury Single Account (TSA) policy and this if scaled through, will make it difficult for agencies to carry out their core functions.”
He also predicted that the revenue collect process may be outsourced to a private firm which will make the plight of the agencies very difficult.
“There will definitely be lacuna in the first instance and that is if it is done in national interest, but I hope this isn’t for personal gains because the revenue collection process may even be outsourced making the situation more precarious. Even though, we need to plug leakages, not to the extent of stopping them from collecting their own revenue because that will be inimical to actualising our functions,” he warned
Speaking to LEADERSHIP on the proposed law, the National President, National Council of Managing Director of Licensed Customs Agents (NCMDLCA), Lucky Amiwero, said NPA, NIMASA and other regulatory agencies shouldn’t be part of the proposal because they are not revenue generating agencies but regulatory agencies.
According to him, these agencies have defined and specific roles according to the act that set them up.
Amiwero explained that while NPA was saddled with responsibility of maintaining channels and developing ports, NIMASA was created for development of indigenous shipping in Nigeria, hence, they are not revenue generating agencies.
He, however, said that integrating the revenue functions isn’t new but the Nigeria government should lump revenue generating agencies with regulatory agencies.
“It is done all over the world, revenue agencies are brought together but the FG’s proposal is different as they want to lump regulators such as NIMASA, NPA, others together with regulatory agencies. These agencies are regulatory not revenue generating agencies as they have their functions well defined .
Giving instances, Amiwero said, “Revenue agencies are FIRS, Customs etc and they are called Integrated Revenue Board. We have them in Canada, Ghana, South Africa, etc they can bring in FIRS, Customs and another revenue age.
“All over the world, only revenue generating agencies are brought together but the FG’s proposal wants to lump up regulators such as NIMASA, NPA, and others. They are not revenue generating agencies but revenue agencies whose functions are defined.
Revenue agencies are FIRS, Customs etc and it’s called Integrated Revenue board. We have them in Canada, Ghana , South Africa, etc. They can bring in FIRS, Customs revenue arm and other revenue agencies. That’s what’s done all over the world but the problem is that the government is doing it differently. NPA is not a revenue agency, they should look at NPA law, they are to develop the port environment. NPA and NIMASA are not revenue agencies, NIMASA’s core function is to develop indigenous shipping, NPA to dredge the channels. All these agencies are not to be included because they are not revenue generating agencies,” he stated.
Also speaking, the former National President of the National Association of Government Approved Freight Forwarders (NAGAFF), Dr Eugene Nweke, faulted the bill.
He added that Customs all over the world were known for revenue collection.
“Customs all over the world are known for revenue collection. What it means is that they would outsource that function to a third party. Customs all over the world are known for revenue collection and anti-smuggling operations,” Nweke said.
According to him, revenue collection had lots of technicalities.
“What they should do with Customs is to train our importers and compel the NCS to go beyond the issues of scanning with a lot of compromises. The government should stop always thinking of how to protect a bill,” he advised.
Also speaking, a senior lecturer in the department of accountancy in Nasarawa State University who asked not to be named because he was consulting for an agency of the government said renaming or rebranding might suggest an expansion of the FIRS’s authority or mandate. This, he said, could potentially allow the federal government to exert more influence over tax and revenue collection, which might be perceived as an attempt to streamline and centralise fiscal operations.
He however said if the FIRS is positioned as having a broader mandate, this could lead to improvements in efficiency and effectiveness in tax collection, possibly increasing federal revenue.
Also, a development economist, Stephen Kanabe said if the renaming indicates a shift toward a more centralised tax regime, it could infringe on the fiscal autonomy of state and local governments, which may lead to tensions between federal and state authorities, especially if the federal government seeks to implement policies that undermine subnational tax bases.
The experts believe that the move could pose challenges in coordinating tax policies and revenue collection between the federal and state governments, leading to confusion and inefficiencies, especially now that the government is trying to streamline tax collection. States may feel marginalised if federal authorities are seen as overstepping their bounds.
There are those who also say a shift in the operational scope of the FIRS could lead to political pushback from state governors and local governments, who may argue that they should have more control over taxation within their jurisdictions.
“If the federal government implements policies that enhance revenue collection at the expense of state revenues, it could negatively impact state-funded programs and services, leading to broader economic consequences,” the lecturer at NSUK said.
He also spoke the mind of those who insinuated that renaming the FIRS could potentially indicate a shift towards a more centralised approach to tax administration in Nigeria. Many also say it may raise concerns regarding the balance of power between the federal government and subnational entities, affecting how taxes are collected and managed across the country.
According to the managing director of Economic Associates, Dr Ayo Teriba, the change of name does not have any real economic difference as long as the content of the new act does not differ from the FIRS act.
Teriba whilst speaking with Leadership noted that there are many parastatals that are federal but in truth are national in their operations. “Similarly, the FIRS collects a lot of revenue not just on behalf of the federal government but on behalf of the federation.
“So, it is indeed incorrect to call it federal inland revenue service. It is correct o call it federation or national revenue service because it is acting on behalf of the federation not just on behalf of the federal. It is acting on behalf of the federal government as well as all the federative units.
“If it is about changing the name it is one that has been long overdue, we should never have been calling it federal inland revenue service. Whether the change of the act goes beyond the change of nomenclature now depends on whether the specific provisions of the act will change.”
