By Emman Ovuakporie
Apparently disappointed, the lawmakers declared that despite the downward review of the N8.7 trillion initial proposed revenue for 2020, the agency still failed.
The lawmakers, who declared this during the 2020 budget defence/2021 budget proposal of Federal Inland Revenue Service held at the instance of the House Committee on Finance chaired by Hon. Abiodun Faleke, queried the astronomical increase in various expenditures incurred during the period under review.
The Committee in session also picked holes in the projected non-oil cost of collection of 4% worth N137.411 billion accrued to FIRS in 2020 and the rationale behind the proposed 7% cost of collection worth N298.441 billion for 2021 in breach of extant provisions in the Nigeria Customs Act.
In his response the FIRS Chairman, Mohammed Nami, explained that the Service realized the sum of N4.95 trillion against the N5.077 trillion in the revised 2020 budget.
Nami affirmed that no fewer than 5,000 staff out of total of 11,000 staff are to get salary increase in 2020, adding that about 70% of the staff work from home as a result of the COVID-19 pandemic/lockdown.
According to the document submitted to the Committee, FIRS internally generated revenue stands the sum of N251,189,952 against the sum of N50 million proposed in 2020, while the sum of N50 million was also proposed for 2021.
In addition, FIRS proposed increase in the personnel cost for 2021 is also predicated on payment of 13 month salary equivalent to one month salary (estimated at N5,717,228,982), subsistent allowance of 30% of consolidated salary (N20,582,024,334), 50% performance bonus of annual consolidated salary (N34,303,373,889), while N1,819,556,000 is to be expended on Contract Driver and N369,848,167 on Contract Staff.
While presenting the 2021 budget proposal, Mr. Nami disclosed that presented a “total revenue collection of N5.900 trillion against budgeted N5.076 trillion in 2020 representing about 16.22% increase above the corresponding year’s budget. Out of the proposed total collection of N5.900 trillion, Non-Oil and Oil components are expected to contribute N4.26 trillion and N1.64 trillion respectively. Consequently, the cost of collection (7% net of 2% NCS VAT) is projected at N289.25 billion against the budgeted N180.76 billion in 2020 to fund the three operational expenditure heads for the year.
“Out of the proposed expenditure of N289.25 billion across the three expenditure heads, the sum of N147.08 billion and N94.97 billion are to be expended on Personnel and Overhead Costs against 2020 budgeted sum of N97.36 billion and N43.64 billion respectively. Also, the sum of N47.19 billion is estimated to be expended on capital items against budgeted sum of N27.80 billion in 2020. The sum is to cater for on-going and new projects for effective revenue drive.”
While responding to various queries raised by the lawmakers, he said: “Why we hope we would have done better, last year is because of the COVID-19 lockdown we could not do tax drive, the businesses also closed about four months, particularly if you even add the #EndSARS protest that rocked the entire nation.
“We also suspended tax audit and investigation for about six months, because we couldn’t visit tax payers. We couldn’t also carry out enforcement activities to recover back debts. Reduction in revenue is an assumption whereas you have increased projected revenue to be collected.
“We are very confident that with the MTEF projection that we have, we should be able to generate up to 5.9, with relative stability in the price of oil, we are very confident that people are in oil sector will be able to turn out positive returns on monthly basis between now and the end of the year.
“On the overhead increasing astronomically, there’s a reason for that. The increase is due to full provision in the 2021 budget for 1800 staff recruited by the immediate past management and the little we added in 2019, 2020.
“Another reason is that we carry out promotion exercise in order to deal with promotion arrears in 2019, 2020. And in so doing about 5,000 staff were promoted which means more cost for us to carter to.
“And if you have more staff surely, their salary will go up, taxes that you’re going to pay on their behalf will go up, the National Housing Fund contribution, PENCOM contribution will go up. Those promoted you have to implement a new salary regime for them. There’s also the issue of inflation and exchange rate differential.”
Speaking earlier, Chairman, House Committee on Finance, Hon. Abiodun Faleke described the budget defence as “all important Legislative assignment on the consideration of the FIRS proposed 2021 Revenue and Expenditure Estimates as submitted by the Agency.
“The significance of this exercise cannot be overemphasized. As you are already aware, the Constitution of the Federal Republic of Nigeria 1999 (Amended) in Section 80(1) provides that all revenue raised under the Constitution or any other Act of the national Assembly shall be paid into and form part of the Consolidated Revenue Fund of the Federation.
“Furthermore, subsection (2) states that no money shall be withdrawn from the Consolidated Revenue Fund of the Federation except in a manner provided by the National Assembly.
“In response to the above, the Federal Inland Revenue Services as a responsible and law abiding agency has therefore submitted the 2021 revenue estimates and expenditure to this august committee for legislative scrutiny and consideration for onwards further legislative business of the House of Representatives.
“On our part as a committee, we have the constitutional mandate under section 62(1) of the Constitution to discharge the onerous task of consideration and presentation to the plenary.
“Also we are obligated by the oath of membership under the same Constitution to do justice to this assignment.”