THE Presidency is expecting a comprehensive explanation today from the Federal Inland Revenue Service (FIRS) on the “variances between budget and actual collection” of taxes between 2015 and 2018.
Executive Chairman of the FIRS, Mr. Babatunde Fowler, got a query from Chief of Staff to the President Abba Kyari. He was given today’s deadline to respond.
The query, titled: “RE: Budgeted FIRS Collections and actual collections” reads: “Your attached letter (FIRS/EC/ECW/0249/19/027 dated 26 July 2019) on the above subject matter refers.
“We observed significant variances between the budgeted collections and actual collections for the period 2015 to 2018. Accordingly, you are kindly invited to submit a comprehensive variance analysis explaining the reasons for the variances between budgeted and actual collections for each main tax item for each of the years 2015 to 2018.”
Following the dwindling intake from oil sales and the determination of the government to expand the nation’s revenue base, President Muhammadu Buhari appointed Fowler as FIRS boss on August 18, 2015 on a four-year renewable tenure. Questions are being raised in some quarters about the query, coming at a time the FIRS boss’ tenure is due for renewal or termination.
Under Fowler, the FIRS in three years – 2016, 2017 and 2018 – collected over N12.6 trillion in taxes.
It collected N3,307 trillion in 2016, N4,027 trillion in 2017 and N5,320 trillion in 2018. The 2018 collection is the highest amount of taxation ever collected in a year by the federal government. In 2015, N3.2tr was raked in.
In January, Fowler announced that the agency was targeting N8 trillion for 2019.
The FIRS boss could not be reached on Sunday but sources close to him said he would send his response before the expiration of the deadline.
The query marked: “Restricted” added, “we observed that the actual collections for the period 2015 to 2017 were significantly worse than what was collected between 2012 and 2014. Accordingly, you are kindly invited to explain the reason for the poor collections.
Mallam Kyari directed Fowler “to respond by 19 August 2019.”
Before the 2018’s N5.320 trillion collection, the highest was N5.07 trillion, which was generated in 2012 under Ms. Ifueko Omogui.
Fowler had said in January: “FIRS’ generation of N5.3 trillion is significant as it was at a period when oil prices averaged $70 per barrel. Oil price was at an average of $100 to $120 per barrel between 2010 and 2013.”
In realising the milestone, the FIRS boss noted that the non-oil component accounted for N2.467 trillion (about 53.62 per cent) of the N5.320 trillion.
The oil element accounted for N2.852 trillion (46.38 per cent). From audit alone, the FIRS collected N212, 792 billion from 2,278 cases with a huge reduction in audit circle.
Fowler added: “While we have been steadily increasing revenue collection over the years, our cost of collection has actually been going down in 2016 it was 2.6 per cent, in 2017 it was 2.49 per cent while in 2018 it was 2.14 per cent.”
The FIRS is entitled to four per cent cost of the total collection.
He said: “The Service has been making tremendous efforts in also increasing the amount of non-oil revenue it collects. Non-oil collection has contributed 64.99 per cent in 2016, in 2017 it contributed 62.25 per cent and in 2018 it contributed 53.62 per cent. This represents the government’s focus on increasing non-oil sources of revenue and the diversification of the economy.”