‘Zacchaeus’ and the perils of a tax collector, by Azu Ishiekwene


Conversation with Azu

When the tenure of a chief executive is coming to an end, there’s usually a feverish outbreak of schemes to push him over the edge, for good or bad reasons. 

Lobbyists are masters of the game. They keep a diary of appointment and termination dates – including possible renewal where the law permits – and also keep a meticulous dossier of everything that happens in-between to sway public opinion and, possibly, the appointor.

If the chief executive under scrutiny is a tax collector, then he is despised with the venom reserved for Zacchaeus, the biblical tax collector.  Zacchaeus was the Israelite hired by the occupying Roman government to collect taxes and levies from his own people. 

Even though he appeared to be an honest guy, doing his job as best as he could, the system was so badly tainted that anyone who held that job was viewed with suspicion. Being a rich and short man only made things worse for Zacchaeus.

Many modern-day Zacchaeuses like the Chairman of the Federal Inland Revenue Service, Tunde Fowler, maybe taller and therefore have no need to climb a sycamore tree to find salvation, but their professional perils have not changed much. 

As Fowler’s first term comes to an end, there has been heightened interest in whether or not he would be retained, with arguments flying on both sides. In a country, so spoilt by oil rent that the government is only just beginning to take taxation seriously against a wall of resentment by the public that considers paying taxes punishment, tax collectors are still as despised today as they were in the days of Zacchaeus. And their enemies are vocal and influential.

With oil revenues ever more precarious and politicians promising heaven on earth, tax collectors need the skills of Zacchaeus, if not his stature, to survive. 

On his appointment as the nation’s chief tax collector in 2015, Fowler was under pressure to live up to the hype following his accomplishments as the chairman of Lagos State Internal Revenue Service (LIRS), where he raised the internally generated revenue from N600m in 1999 to N20billion in 2015.

The challenges at FIRS were daunting, yet Fowler was also under pressure to meet the high standards set by his predecessor, Ifueko Omoigui-Okauru. With crude oil prices plunging as low as $30 per barrel at some point in the life of the Buhari administration, Fowler needed something beyond the precarious balancing act of Zacchaeus to raise revenue from taxes. The economic recession compounded his misery. 

But he took the plunge. Fowler plugged internal leakages and loopholes instigated by insiders; adopted more efficient tax collection methods; and enticed a large army of tax defaulters through the Voluntary Assets Income Declaration Scheme, which raked in N17billion within the first six months of introduction.

By 2016, FIRS had brought into the tax net 800,000 new corporate taxpayers and by the first half of 2018, tax revenue had increased by 42 percent. Non-oil tax revenue in the same year was a record N2.852trillion, representing more than 50 percent of N5.3trillion that year. 

By the end of 2018, he had almost doubled the revenue benchmark from N3.2trillion in 2015 to N5.3trillion. Also, the FIRS generated N1.5 trillion revenue in the first quarter of 2019, and revenue from non-oil taxes had increased to 11 percent compared to the previous year.

With more reforms, including but not limited to tackling multiple taxes/duties/levies; improvements in infrastructure; removal of red tape and better regulatory environment; reduction in corporate taxes; and possibly, the introduction of the flat-rate tax, the revenue from the tax pie could grow beyond its present level. 

As things are now, the relatively narrow taxable base, comprising mainly distressed formal sector workers and struggling small business owners, is reaching its elastic limits. While going after the big-time dodgers, the government needs to grow the economy more aggressively and nurture small businesses to expand the tax base. 

Also, the challenge for countries like Nigeria is how to substantially fund their budgets from incomes not determined by the outside world, which include extractive resources, loans, and grants. 

Collaboration and involvement, as well as deploying technology have been crucial to the changes at the FIRS in the last four years. The service signed a memorandum of understanding with the state revenue boards to exchange taxpayer information. 

It also broadened its VAT collection scope with the adoption of the States Accountants General (SAG) collection platform, VAT Auto-Collect, integration of GIFMIS platform with ministries, departments and agencies (MDAs) and through e-Service payment option. Due to these efforts, FIRS and states have over 19 million taxpayers nationwide by 2018.

Through collaborative efforts, monitoring and compliance tracking have also improved. And because technology has been put to better use, it is easier to file tax obligations. 

By aggressively enforcing the Taxpayers Identification Number (TIN) registration exercise, 45 million taxpayers would be captured in the tax net by December 2019. The figure was less than half of that when Fowler took over in 2015. 

About 6,772 accounts with balances of between N1billion and N5billion were identified without their owners having TIN and did not file any tax returns. They are reportedly being engaged on what they should henceforth be paying to FIRS yearly at tax.

Some other measures Fowler introduced to grow FIRS tax returns in the last four years include automation and incentives for taxpayers: Integrated Tax Administration System (ITAS); e-registration; e-Filing; e-Payment; e-Receipt; e-TCC (Electronic tax certificate). He is also focusing on big players in the property market who control big portfolios in key cities like Lagos, Abuja and Port Harcourt and don’t pay tax on them. 

Also worthy of note is that within the last four years, FIRS has helped facilitate the payment of N135.8b as outstanding Pay As You Earn (PAYE) tax liabilities owed the states by Federal Ministries, Departments and Agencies (MDAs) from 2002 to 2016. 

The recent reclassification of Nigeria by the World Bank among the most improved countries with regards to the Ease of Doing Business attributed substantially to the institutional reforms introduced by Fowler at FIRS, which means that the future is not gloomy without oil.

With Nigeria’s 2020 national budget estimated at N10trillion and considered perhaps the most ambitious ever laid down by a Nigerian government, taxation becomes a core source of revenue projections, especially with the unstable oil prices. It is a reminder of the conveniently reminisced glorious past, particularly pre-Independence Nigeria, when regions funded their budgets from taxation, agriculture and real production, not oil rent.

Will the hawks in government allow Fowler to carry through the reforms required to further strengthen the FIRS or will the lobbyists’ pressure for change prove too hard to resist?

Whichever way the government decides, the peddling of the long knives that started with Zacchaeus in Jericho won’t end with Fowler. But the government’s answer will send an important message about how serious the government is with its reforms.

Ishiekwene is the Managing Director/Editor-In-Chief of The Interview  


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