The Federal Government’s tax revenue of N477bn for the first quarter of the year fall short by N124bn, Chairman, Federal Inland Revenue Services, Mrs. Ifueko Okauru, has said.

Minister of State for Finance, Mr. Remi Babalola

 
Chairman, Federal Inland Revenue Service, Mrs. Ifueko Omogui-Okauru

To reinforce the import of the shortfall, Minister of State for Finance, Mr. Remi Babalola, also said if not for the Excess Crude Account, government would have had it rough in the first quarter of the year.

Both Okauru and Babalola spoke in Abuja on Monday at an International Conference on Effective Audit and Investigation for Improved Tax Compliance hosted by FIRS.

The FIRS boss who was represented by Coordinating Group Director, Corporate Development, Mr. Ossy Chuke, said the N353bn realised in the first quarter of the year was less than expected.

She said in the face of the developmental obligations to the citizens which government was striving to meet, there was urgent need to reverse the trend of performance, especially as result low oil prices had hit export revenues.

Okauru, however, disclosed that in the last 10 years, FIRS has generated about N10tr from various taxes. She added that much of the N10tr was collected in the last four years.

She said although the tax revenue collection appears to have grown over the years, the reality was that the performance could be better.

She listed the constraints to realising the full tax potential to include negative attitude to tax as a civic obligation; incomplete and inaccurate tax returns; under assessment by tax officials; and submission of tax returns by quacks.

Other obstacles are collusion between consultants and officials to defraud the government diversion and conversion of tax payments by banks and other collecting agents; lack of competence among tax officials; and inadequate information in tax administration.

The FIRS boss said the Federal Government has embarked on a number of reforms to make the tax system and administration more effective and efficient. The reforms produced four new laws in 2007 while four bills are pending in the National Assembly.

Babalola listed the Excess Crude Account as one of the good things President Umar Yar’Adua’s government inherited from the former administration headed by Chief Olusegun Obasanjo.

He said in the face of the current global economic meltdown, it had been necessary to use funds from the ECA to smoothen the government expenditure.

Our correspondent reported that the three tiers of government in the country had in April shared N204.29bn as arrears for the augmentation of revenue shortfalls in the months of January, February and March.

Other economic reforms, according to Babalola, which the Yar’Adua’s administration inherited, sustained and fine-tuned included the adoption of an oil based fiscal rule and the introduction of medium-term expenditure framework.

Others are the use of annual fiscal strategy paper, monthly publication of revenue allocation to the three tiers of government, due process mechanism in public procurement and adoption of the Extractive Industries Transparency Initiative.

The minister said a sound fiscal policy management was very critical to the successful implementation of the Federal Government’s economic programmes.

He said, “Suffice it to say that sound fiscal policy management, predicted on consistency, sustainability, efficiency, accountability and transparency, is essential for accelerating the pace of economic growth and development.

“Fiscal policy of government has profound impact on the level and composition of taxation and government spending, which in turn, affects many other variables in the economy.

“Fiscal policy has correlation with aggregate demand and the level of economic activities as well as the pattern of resource allocation and the distribution of income. In all of these, fiscal stabilisation policies are important in sustaining economic growth and reducing poverty.”

Source: Punch