The House of Representatives has queried the executive chairman of the Federal Inland Revenue Service (FIRS), Mr. Mohammed Nami, over the agency’s inability to meet the N5.077 trillion target, despite the downward review of the N8.7 trillion initial proposed revenue for 2020. Chairman of the House committee on finance, Hon. James Faleke, made the position of the House known at a budget defence session with the management of the FIRS, yesterday. Faleke and his colleagues also picked holes in the increase in various expenditures incurred during the period under review.
The committee equally questioned the projected non-oil cost of collection of 4% worth N137.411 billion accrued to FIRS in 2020 and the reasons behind the proposed seven per cent cost of collection worth N298.441 billion for 2021, which they argued was in breach of extant provisions in the Nigeria Customs Act. In his response, the FIRS chairman explained that the Service realised 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 a total of 11,000 staff are to get a salary increase in 2020, adding that about 70 per cent 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 at 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 per cent 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, Nami disclosed that he presented a “total revenue collection of N5.9 trillion against budgeted N5.076 trillion in 2020, representing about 16.22 per cent increase above the corresponding year’s budget. Out of the proposed total collection of N5.9 trillion, Non-Oil and Oil components are expected to contribute N4.26 trillion and N1.64 trillion respectively.
“Consequently, the cost of collection (7 per cent net of 2 per cent 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 the budgeted sum of N27.80 billion in 2020.
The sum is to cater for ongoing 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 protests that rocked the entire nation. “We also suspended tax audit and investigation for about six months, because we couldn’t visit taxpayers. 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 N5.9 trillion, with relative stability in the price of oil, we are very confident that people that are in the 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 a full provision in the 2021 budget for 1,800 staff recruited by the immediate past management and the little we added in 2019 and 2020. “Another reason is that we carry out promotion exercise in order to deal with promotion arrears in 2019 and 2020. And in so doing, about 5,000 staff were promoted which means more cost for us to cater to.