FG Employs Tax Consultant To Meet N75bn Revenue Target

Okonjo Iweala

The federal government yesterday engaged the services of an international tax firm to help in strengthening tax collection in non-oil sector by the Federal Inland Revenue Service (FIRS).

Finance minister and coordinating minister for the economy Dr Ngozi Okonjo-Iweala, who announced the decision taken at the Federal Executive Council (FEC) meeting, said it became necessary to enable government generate additional N75billion within the 2014 fiscal year.

According to the minister, the firm, McKinsey & Co, which will commence operation this year over the next 12 months is expected to be paid 1.75 per cent of the targeted collectible revenue as commission, which is N470million.

Mckinsey & Co’s involvement is for the provision of technical support to the FIRS towards non-oil revenue and enhancement and capacity of the organisation in its tax drive.

The FIRS targets about N2.95trillion of non-oil tax revenue in 2014. According to the finance minister, the involvement of the consultant will take in the additional N75billion.

Okonjo- Iweala said: “The FIRS brought a memo seeking to strengthen non-oil tax collection and non-oil revenue collection. The drive that this administration is undertaking in terms of diversifying the economy seems to be yielding results. We need to expand our tax and revenue base to be able to do better.

“Nigeria’s tax to GDP ratio currently is relatively low at 7 per cent compared to other countries of the world. Our aim is to move from 7 per cent to 22 per cent over time in the medium term. We are hoping, over the next five years, the country will move gradually to this ratio. We want to do that through blocking all the loopholes and leakages in tax collection. That is why we sought to find avenues to support the FIRS.”

The minister added that 65 per cent of registered taxpayers have not filed returns in the past two years while about 75 per cent of medium and small businesses currently in the tax system were also not paying tax, even as she said “about 30 per cent of the companies operating under pioneer status abuse those incentives and evade tax”.

To combat this development, Okonjo-Iweala noted that McKinsey &Co has suggested five strategies to be adopted by the FIRS, which include: improve audit, tax filing enforcement, review of tax holidays and exemption, tax arrears and debt enforcement, increased registration of companies and improved external communication.

Also, the minister of communication technology, Mrs Omobola Johnson, yesterday submitted a memo which seeks Council’s approval of the National Addressing Policy which will set out the framework for the development and implementation of the National Addressing Policy System in Nigeria.

In particular, this policy will assist government’s ability to plan and implement public policies and services, fight against natural disasters and diseases including emergency management and to reinforce national and international security in line with the UN Universal Postal Union’s Doha Declaration.

The memo, she said, would be a fundamental step in connecting people to public and private services, human rights and setting the foundation on which critical national policies can be built.