Furore over proposed merger of FIRS, Customs

Furore over proposed merger of FIRS, Customs


The proposed merger of the Nigeria Customs Service with the Federal Inland Revenue Service (FIRS) as recommended by a committee set up by the minister of finance has continued to generate mixed feelings amongst stakeholders with some lauding the initiative as timely and others arguing for a status quo. Ibrahim Apekhade Yusuf in this report examines the issues

Faced with the reality of dwindling oil receipts due to the fall in global crude oil prices, most oil-producing countries are desperately seeking new streams of income to close the funding gaps.

Of course, Nigeria, especially since the advent of this administration has considered fresh revenue streams as absolutely inevitable, especially away from oil.

One avenue it hopes to achieve this objective is by generating revenue from taxes across the board both from the sea ports, land borders, whether in terms of corporate tax, income, Value Added Tax to mention just a few.

In furtherance of this fundamental objective, the Minister of Finance, Mrs. Kemi Adeosun, had set machinery in motion to empower the Federal Inland Revenue Service (FIRS), which is the organ that generates revenue on behalf of the Federal Government towards delivering on the avowed mandate of ensuring improved revenue yield for the country to meet her obligations.

Subsequently, the minister had empanelled a National Tax Policy reforms Committee headed by Professor Abiola Sanni on August 10, 2016.

The Nation gathered that the mandate of the Committee was to advise the Federal Government on how to boost the Internally Generated Revenue among others.

It is, however, instructive to note that this is not the first time the Federal Government is toying with the idea of tax reforms.

Investigation by The Nation revealed that the Federal Government had empanelled a Study Group led by Dr. Dotun Philips few years ago to reform the nation’s tax policy.

Giving insight on the activities of the Study Group, Chief Mark Dike who served as secretary of the Committee under Dr. Philips said the Group at the time made far-reaching recommendations for the efficient service delivery of the tax regime in the country.

Thankfully, Dike said the Prof. Sanni-led Committee built on the work done by his Study Group.

The policy, The Nation further gathered was first published in 2012 by the former Minister of Finance and Co-ordinating Minister of the Economy, Dr. Ngozi Okonjo-Iweala, to entrench a robust and efficient tax system in the country.

Recommendations by Prof. Sanni-led Committee

The Prof. Sanni-led Committee amongst other reasons stated that the merger of the Nigeria Customs Service with the Federal Inland Revenue Service (FIRS) would help improve administrative efficiency, reduce the cost of revenue collection as well as ensure accountability.

Part of the recommendations of the Committee, The Nation gathered was to help the country move forward from its current position of 181 out of 189 countries to top 50 in the Ease of Paying Taxes World Report.

At the end of the committee’s assignment, the draft of the reviewed national tax policy was presented at the committee’s second stakeholders’ engagement in Abuja by the West Africa Tax Leader at PricewaterhouseCoopers, Mr. Taiwo Oyedele.

Speaking at the event, Oyedele said the committee agreed that the current system was encouraging multiple taxation, tax evasion and wastage.

While noting that the current revenue generation system by both agencies as inefficient as their functions were duplicative, Oyedele said: “Part of our recommendations will be that the FIRS and the Customs should be merged. But not just them, but all revenue generating agencies at the federal level should be merged into one.

“What we have right now is not effective because it duplicates the collection mechanism. All the structures you have in the FIRS are replicated in the Customs. So, the cost of collection goes up. It also makes it easier for tax evaders to manipulate the system. You can provide information for the Customs and the FIRS is not aware of it.

“So if you have one revenue agency, it will flag all the information about a taxpayer when he or she is paying tax. It will also ensure that leakages in the system are reduced. This is why we are recommending merger of the agencies as part of the policy.”

The Nation was reliably informed that the the Ministerial Committees’ report was due for presentation at the Federal Executive Council meeting last Wednesday but has been put on hold in the interim.

Feeling the pulse of stakeholders

Speaking with a cross sections of stakeholders they were noncommittal.

When The Nation visited some Customs commands in Lagos, most of the officers and men spoke in hushed tones concerning the subject matter of the proposed merger.

From the body language of most of them, you could tell the new policy initiative is not one they are happy about.

“The policy is not something we’re comfortable about but whatever decision is reached by the Federal Government on the matter is left for us to carry out,” said one of the staff at the Federal Operations Unit, Ikeja, who asked not to be named because he was not authorised to speak with the press.

When The Nation enquired about the proposed merger between the FIRS and Customs, the NSC spokesman, Wale Adeniyi said he was not aware of such a move.

According to him, the customs high command led by Col. Hameed Ali (rtd) was not carried along in the scheme of things.

“I’m only just hearing about that from you. However, l can say those proposing the merger knows why they are proposing it. I cannot react based on newspaper speculations.”

His counterpart at the Ministry of Finance, Salihu Saleh, who is Director of Press was said to be in transit to the United States for the World Bank meeting and was yet to respond to emails sent to him as at press time.

However, speaking with Mr. Wahab Gbadamosi, Head Communications and Liason Department of FIRS, he said the agency led by Mr. Babatunde Fowler, ordinarily cannot react because the FIRS is a parastatal under the Ministry of Finance.

Support for merger

Justifying the need for the merger, Dike said: “Most countries of the world have since merged the revenue collecting desk of the Customs with the revenue agencies and we have good examples both within the sub-region and other advanced economies.

“Within the continent of Africa, l know for a fact that in South Africa, Kenya, Uganda, Rwanda, Ghana, they’ve since merged the revenue collecting arm of customs with the revenue organ of the state.

“In more advanced countries like the UK and Canada, it’s the same thing. So I strongly support that it should be merged with the FIRS to ensure efficiency in tax collection and revenue generation as the case may be.”

Eben Akinyemi, a tax consultant, is also on the same page with Dike. According to him, the move to merge both agencies revenue collecting arms as one will ensure efficiency in terms of service delivery and significantly reduce loss of revenue due to underdeclaration and overinvoicing as the case may be.

Argument against merger

Expectedly, there have been a welter of criticisms against the proposed merger of the FIRS and Customs, with those against the move citing technicalities in the operations of both bodies.

In the view of Adebayo Shittu, there is no basis for the merger of NCS and FIRS as the statutory roles and responsibilities of the two government agencies are completely different from each other.

According to him, “The NCS is a para-military organisation. That is one of the reasons why officers and men of Customs carry arms and ammunitions. As far as I am concern, the Minister of Finance did not get it right in seeking for the merger of the two government agencies.”

The merger, he insisted,  will lead to the loss of several jobs and add to the high unemployment rate in the country.

He argued that on the surface, the idea of merging both organisations looked desirable but is fraught with danger if the minister succeed in her plans through the Sanni-led NTP committee.

Echoing similar sentiments, Barr. Olusegun Amao, a maritime lawyer said the country was not yet equipped to run such a policy. While not completely against the move, Amao would rather the government develop the right structures in place for it to work.

How revenue agencies, customs operate abroad

Most countries of the world  have customs and excise parastatals as well as agencies that collect revenue on behalf of the Federal Government.

According to a document obtained on its website, the Canada Revenue Agency, or Agence du revenu du Canada, is the federal agency that collects taxes and administers tax laws for the Canadian government, as well as for many of Canada’s provinces and territories.

Besides, the agency oversees a variety  of social and economic benefit and incentive programs via the tax system, along with international trade legislation.

Source : Thenationonline