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Innovations increased states’ revenue to N1.7 trillion

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From Juliana Taiwo-Obalonye, Abuja

The Chairman of the Nigeria Governors’ Forum (NGF) and Ekiti State governor, Kayode Fayemi, has attributed the increase in the Internally Generated Revenue (IGR) of the 36 states of the federation over the past few years to the implementation of administrative reforms and increased digitisation.

According to the governor, the innovations account for the increase in the 2021 IGR from N1.3 trillion to N1.7 trillion.

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Governor Fayemi stated this on Monday at the opening of the 8th edition of the IGR Peer Learning Event and launch of the NGF Public Finance Database in Abuja.

He noted that state governors had purposefully resolved in 2019 to embark on consensus reforms aimed at ending multiple taxation, professionalising and modernising our revenue services, and embracing a taxpayer-centric culture that eases taxpayer compliance and strengthens the existing social contract.

“This pact birthed the State Action Plan for Revenue Generation (SAPRG), whose implementation progress we will be examining today with the objective of underscoring what has worked and what we need to do better to foster an enabling tax environment and administration that allows us to optimise our revenue potential as subnationals,” Fayemi stated.

“Our pursuit to do things differently has benefitted from the relentless efforts of our state officials, technical assistance programmes within our Secretariat and partners’ support. Your collaboration and support have ensured we stay the course of implementation, delivering far reaching reforms, which have yielded the results we see today.

“We have seen total IGR of states grow from NGN1.31 trillion in 2019 to NGN1.67 trillion in 2021 and the share of IGR (as % of total recurrent revenue) grow from 31% in 2019 to 35% in 2021. While this is good progress, we must not lose sight of the need to sustain and advance the momentum of reforms, considering the decline in FAAC receipts.

“Our renewed effort must take into consideration the emerging dynamics surrounding private income in Nigeria today including the devaluation effect of the rising inflation rate, structural transition in employment, business dealings and investments, driven by the evolution of technology.

“Beyond the laws and regulations, we have passed, we must occasionally by policy respond to the fast-changing tax environment, if we must stay ahead of evasion and avoidance tactics. We recognise the need to support our internal revenue services and continue to empower them with the necessary political support and financial resources required for them to execute their mandate effectively. We remain committed to keeping this pact. However, mutual accountability must exist – to whom much is given, much is expected.”

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Going forward, the Ekiti governor underscored the need for subnational governments to “seek out ways to expand the tax net and improve our taxpayer database. This will require ending the proliferation of taxpayer identification numbers and databases. It is pertinent we harmonise; leveraging a unique identification number as is global best practice.

“For us to achieve this, information sharing between jurisdictions must be seamless, not only between the tiers of government but also inter and intra-state. I would like to encourage the Joint Tax Board (JTB) in its pursuit for a plausible solution to this anomaly.

“On strengthening public legitimacy for tax collection, we have improved the transparency not just around tax revenues but the entire treasury. Today our budgets and audited financial statements are not just publicly available but also in citizen-friendly versions. This will be supported by the NGF Public Finance Database which we will be launching today.

“A database that allows users to easily filter and analyse states’ fiscal data and information. We understand the need to build greater accountability, especially showing citizens the linkage between their taxes and service delivery. We are working with our revenue services and other MDAs to expand our tax-for-service initiatives in rewarding compliance while ensuring citizens know where we expend their taxes annually.”

NGF Director General Asishana Okauru, meanwhile, recalled that last year’s event focused on the tax-for-service initiative and the launch of our publication on the analysis of informal sector workers’ perceptions of paying taxes in exchange for free basic healthcare was well attended by relevant state actors.

He pledged the Forum’s resolve towards playing an active role in mainstreaming the programme through advocacy and by securing the commitment of governors to mobilise resources to support the programme.

“This year, our theme is on the ‘state’ of tax reforms in Nigeria. The theme stems from our work over the last 8 years to strengthen domestic resource mobilisation through our IGR Dashboard and HelpDesk programmes that have supported the use of evidence in tax reforms, advocacy, and technical assistance provision to states.

“The country’s first open-source database of the fiscal data of the 36 state governments will also be launched today. The portal will host comparable annual data on government spending, revenues, and financing in all states, and will feature hundreds of performance indicators that measure the quality of public spending and the intersection of public financial management and service delivery in the country.”

He added that the technical sessions after will focus on the three primary tax reforms that we see as essential for all states – specifically, the implementation of state Consolidated Revenue Codes (CRCs), autonomy for tax authorities and tax-for-service programmes.

“These reforms, when properly integrated in the tax administration system, are capable of scaling up effective organisational management, the quality of taxpayer services, taxpayer compliance and tax revenues.

“With our engagement with states, we have seen that where tax authorities have been fully supported by state governors, administrative reforms have led to increased digitalisation, taxpayer compliance, and tax revenues.

“This accounts for the increase in IGR over the last few years, particularly last year when it rose from N1.3 trillion to N1.7 trillion in 2021. At 35% of the total recurrent revenue of states, IGR definitely plays a major role in state-building today than in the past.

“I should also mention that our tax reform work will feature significantly at our forthcoming induction programme for new and returning governors which will hold after the general elections next year.

“The induction programme is organised as part of NGF’s onboarding plan for new and outgoing Governors as they transition into new roles. The visibility of economic, social, political, and environmental challenges today, and the expectation for immediate action places a heavy burden on state governments for timely action.

“Through our IGR programmes we will continue to help states close their capacity gaps by continuing to share innovative practices that have worked and by demanding action from governors to support the work you do,” he stressed.

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