Internal Revenue Sourcing And Other Funding Plans
By Dr Ifedi Okwenna
The revenue from oil is continuously declining with the unceasing fall in price of crude oil in international market. This means that our State’s own share from the federation account is dwindling incessantly. If we must remain afloat, we should be innovative in the way we shore up our internally generated revenue (IGR). Revenue generation is core of good governance as that is the only way a government can meet her obligations as well as to bring growth and development. Unfortunately, Anambra State is currently not doing so well in this regard.
According to the report by National Bureau of Statistics, Anambra State in 2019, received a total sum of N26.4billion in Internally Generated Revenue (IGR) (Tax+MDArev), placing her in 14th position out of 36 states of Nigeria and the Federal Capital Territory and lower than Enugu State that generated N31.1billion over the same period. This paltry sum was received despite the enormous potentials and numerous opportunities that are abound in the State. The receipt is not the kind of revenue that can sustain the envisaged growth and development, expected to put us among the big league states in Nigeria. Indeed, if it continues, in the face of rapidly decreasing receipts from the Federation Account, the negative economic impact of Covid-19 pandemic, the numerous novel and perennial challenges, our state will soon no longer be viable and may be incapable of managing our recurrent expenditure profile talkless of delivering capital projects.
- Challenges to collection of Internally Generated Revenue
Analysis of the challenges bedeviling the collection of Internally generated Revenue in Anambra State shows that the problems are:
a. Lack of Transparency: Collection is currently bedeviled by corruption and under declaration.
b. Absence of Data/Use of Consultants: There is no comprehensive data system and the use of consultant is therefore defective as proper baseline studies are not been done to check the total monthly collection against the remittances by the consultants.
c. Staffing and Training: The State Revenue Agency do not have adequate number of staff with adequate skill set and training to handle modern revenue collection system.
d. Insufficient overhead releases for running efficient and effective internal revenue generation operations. The lack of revenue held them from upgrading its operations to improve performance thereby collecting revenue from only soft sources.
e. Low compliance mechanism. The Board can’t manage and enforce compliance by all sectors of the state economy.
f. Operation not e-compliant. The Tax Board still collects and process tax collection manually.
g. Tax Identification Numbers: Not every taxable adult has Tax Identification Number as approved by the Joint Tax Board.
h. Weak Training Programme: This has reduced the development of the capacity of the Tax office employees on data collection and management, tax assessment, tax collection process.
- Strategies for Improved IGR in Anambra State
My Government going forward, shall be people and business friendly and will not raise taxes, however, we shall as far as possible raise our IGR through innovative system of tax Administration and expanding of tax net. We shall not unduly and unruly harass citizens of this state for purposes of tax payments, but shall be persistent, persuasive and civil in ensuring that citizens of state perform their most important civil obligation as citizens of Anambra State. Our innovative ideas include:
a. Mutual Benefit Tax System.
We shall introduce Mutual Benefit Tax System or Incentive-based tax system. This system will make every payer to be a direct beneficiary of his commitment to paying tax. Government shall during economic emergencies or at the end of every financial year release some incentives to those who voluntarily pay taxes to encourage them to be good citizens. This will widen the tax net, capture more people into our tax system and expand the financial inclusion.
b. Multiple Tax System: We shall eliminate multiple and excessive tax system in the state by consolidating all the tax payable in the State.
c. Biometric Data: We shall develop a biometric data system of all tax payers to enable capturing and inclusion.
d. Acquire and Operationalize an integrated Tax administration system (ITAS), a central data base to be linked to Tax identification number.
e. Automation, Collection and remittances of IGR in the State shall be by e-wallet system. This makes for ease of paying, and both generation and notification of tax payment is done online. This blocks leakages and enhances effective taxation.
f. Tax Justice: We shall give people value for money to serve as motivation and encouragement to pay. This will enhance Tax Justice.
g. Presumptive Tax System: Ensure every person and business registered in Anambra is effectively captured including the informal sector. A presumptive tax system shall be used for small informal traders.
h. Access to Tax Payers Account: We shall develop a system to have Access to tax payers account to ensure that everyone is taxed adequately without undue favour to high net-worth individuals. This promotes transparency and accountability in the system.
i. Training: We shall embark on continuous training of Tax Administrators on tax assessment, collection, compliance monitoring and enforcement.
j. Review of Tax Laws: We shall continuously review the various tax laws to be in line with all tax reforms in the State.
k. Harmonization of Tax: We shall harmonize all taxes collected by MDAs and by the Local Governments.
l. Tax Education: There shall be continuous Tax Education programme to encourage tax payers to voluntarily register.
m. Inclusiveness: Involvement of tax stakeholders on issues concerning revenue generation, allocation, disbursement and accounting to generate confidence.
n. Revenue Court: Create Revenue Court to ensure quick dispensation of justice in our tax system in the State.
(In Part 2, we shall discuss New Sources of Revenue in Anambra State going forward.
Join us, let’s go to work.
It’s possible.
innovateanambra
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