Amosun seeks review of VAT sharing formula

*Targets 10m new tax payers by December

Ogun State Governor, Senator Ibikunle Amosun, has canvassed a review of the sharing formula of revenues accruing to the federation account through non-oil taxes, including the Value Added Tax (VAT).

Amosun who spoke in Abeokuta insisted that recent development has made it inevitable for the review.

He explained that the non-oil revenue sharing formula currently in use is obsolete noting as at the time it was introduced 20 years ago, Ogun State, was way back because of the number of industrial firms it had then.

“Today, Ogun State is the industrial capital of Nigeria. The sharing formula should therefore reflect this new reality. This is derivation in another form”, he added.

The Governor spoke when he played host to the management of the Joint Tax Board (JTB) at his office, on Monday.

The Board meets on quarterly basis to appraise the performance of the members and to deliberate on tax issues of national importance to develop new strategies and also carry out its functions, including advising all tiers of government on tax matters, so as to evolve an efficient tax administration system in the country.

Amosun, in his keynote address at the meeting, stated that the present economic recession is a blessing in disguise because “it has made it inevitable for Nigeria to think outside the box”.

He challenged the participants who are heads of Internal Revenue Services in their respective States to bring in new ideas and “innovation” that would lead to improved tax collection.

Worried by the present economic situation whereby many States can’t pay salaries, Amosun said: “If any State is not well, the whole Nigeria is not well”.

The Governor stated, “It is a good thing that for the first time in the life of this administration, non-oil receipts accounted for over 70 percent of the funds shared at the last Federal Accounts Allocation Committee (FAAC). It is a commendable and a welcome development because it signifies a major shift in focus from oil to non-oil revenue.

“But in the same token, I think it is very expedient to ask that we take a second look at the formula we use in sharing the proceeds from these non-oil revenue”, he quickly added.

Amosun argued, “If we make a lot of money from industries, we should also remember that these companies reside in a state and they put enormous pressure on the environment and the roads in those states. Those various State governments carry the cans and pick the bills for cleaning the environment.

“It is therefore only good for the management of RMFAC (Mobilisation and Fiscal Allocation Commission) to give more backing to those States hosting these companies.”

The Governor also seized the opportunity to challenge the management of the Joint Tax Board (JTB), which includes chairmen of 36 states Internal Revenue Services, representatives of the Revenue Mobilisation and Fiscal Allocation Commission (RMFAC), the Nigerian Customs Service and the Immigration Service, to “device creative strategies” for ensuring that more wealthy Nigerians are brought into the national tax bracket.

“The rich and wealthy don’t pay taxes and even when they do, they underpay. They make a lot of money but don’t pay anything or don’t pay the requisite tax. We all go to other advanced nations and see that these wealthy people don’t escape the way they do here. So the challenge for the JTB is to correct this. You must think out of the box to achieve this,” Amosun said.

The Chairman of the JTB, Babatunde Fowler in his speech, disclosed that for the first time within the last six months, non oil receipts accounted for 70percent of the N500billion shared among the States at the last FAAC meeting “because of strategies put in place to ensure that everyone pays their taxes as and when due.”

Fowler stated, “We have put strategies in place to make sure that everyone pays their taxes as at when due. Over the last six months or so we have added close to 700,000 corporate accounts and among ourselves as members of the joint tax board states which also includes States boards of internal revenue we have put ourselves under heavy pressure to make sure that bring more people into tax net.”

He lamented that 33 States in the federation still depend on Federal Allocation to fund their budget, saying the goal of the meeting was also to bring other States to a level where they would be able to generate at least 50 percent of their budget internally.

The JTB boss who regreted that only 10 percent of taxable adults are currently being taxed in Nigeria, revealed that the JTB is now targeting 10 million new taxpayers before the end 2016.