Mohammed Nami, Chairman, Federal Inland Revenue Service (FIRS) says the Service’s projection for 2021 is N5.9 trillion.
He made the disclosure while meeting with the House of Representatives Committee on Finance, led by James Falake, on the Service’s 2021 budget defence and consideration of its proposed Revenue and Expenditure Estimates. Out of the proposed figure, the chairman said that non-oil and oil components were expected to generate N4.26 trillion and N1.64 trillion respectively. He, however, put the cost of collecting the projected revenue at N289.25 billion against the budgeted N180.76 billion in 2020 to fund the three operational expenditure heads for the year.
He said: “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 budgeted sum of N27.80 billion in 2020. The sum is to cater for on-going and new projects for effective revenue drive”.
Speaking on why the agency failed to realize its N5 trillion target in 2020, Nami said the lockdown occasioned by the COVID-19 pandemic and the #ENDSARS protest affected the drive for taxes. Responding to a query by the committee on why there was an increase in the recurrent expenditures of the Service for 2021, Nami attributed it to the new salary structure occasioned by recruitment of more staff. He said there were about 1,800 staff recruited by the erstwhile management between 2019 and 2020, adding that the Service also carried of about 500 members of staff. ‘’There’s lockdown effect on businesses, implementation directive also for us to study, research best practices on tax administration which involves traveling to overseas and we also have to expand offices and create offices more at rural areas to get closer to the tax payers, we pay rent for those offices and this could be the reason why all these things went up. ‘’If you have more staff surely, their salary will go up, taxes that you’re going to pay on their behalf will go up, the National Housing Fund contribution, PENCOM contribution will go up. Those promoted you have to implement a new salary regime for them. There’s also the issue of inflation and exchange rate differential”, he said.
The chairman however gave hints of a marginal reduction in the taxable income of tax payers due to the effect of COVID-19 pandemic, ruling out a new recruitment exercise this year. Earlier, members of the committee had queried the increase in the budget and demanded explanation on the shortfall in 2020 revenue projection. The lawmakers also raised concerns on the projected non-oil cost of collection of 4 percent which was accrued to FIRS in 2020 and worth N137.411 billion. They also demanded explanation on the reason for the proposed 7 percent cost of collection worth N298.411 billion for 2021.