New FG Tax Regulation May Cause Lagos N6b Loss In Revenue

Lagos State will lose about N6.25 billion monthly from its Internally Generated Revenue, IGR, put at about N25 billion monthly, as a result of the new tax law put in place by the Federal Government, barring state governments from engaging consultant tax collectors.

This was stated yesterday by the Department for International Development -State Partnership for Accountability, Responsiveness and Capability, DFID-SPARC, Lagos State Programme.

This may be as a result of the fact that the state, at the moment, lacks the requisite capacity to effectively discharge the functions of the contractors.

Mr. Austin Ndiokwelu, Senior Technical Officer (Public Finance Management/Policy & Strategy), DFID-SPARC, who disclosed this in Lagos, noted that the conclusion was reached after a series of research and investigations on the likely effect of the new tax law, carried out by the Lagos State Government, in partnership with DFID-SPARC and other consultant

Ndiokwelu, who was speaking at a two-day training programme for Heads of Planning and Budget in all Local Government and Local Council Development Areas in Lagos, on Planning and Budget, organised by the Lagos State Ministry of Economic Planning and Budget, said the new law will have a negative effect on the IGR of Lagos.

“Following the new law, the Lagos State Government undertook a study and review and it was concluded that 25 per cent of its Internally Generated Revenue, IGR, will be negatively affected, monthly,” he said.

He, however, noted that the state government is coming out with a number of strategies to counter effect of the new law on its revenue.

He identified abandonment of local capacity and difficulties in getting the state government and its development partners to agree and adhere to scheduled time for inputs as some of the major challenges militating against the state’s public finance management reforms.

However, he noted that the government can address the shortcoming and plug wastages with its Public Procurement Act and effective management of its debt programme.

Also speaking, Mr. Ben Akabueze, Lagos State Commissioner for Budget & Economic Planning, said the government is striving to be independent as much as possible from revenue sources it cannot control, hence its decision to focus its budget programme on its IGR.

Akabueze, represented by his permanent secretary, Mr. Bayo Sodade, declared that a lot of work still needs to be done at the local governments as regards internally generated revenue, saying this is as a result of lack of political will.

He emphasized the need for local governments to focus on increasing IGR, instead of clamouring for funds from the federal and state governments.

The Federal Government had on Monday, barred states in the country from the collection of approved taxes by engaging agents other than the various states’ boards of Internal Revenue Services, BIRS.

The government also stopped MDAs, of the Federal Government from collection of taxes and levies, saying this is a violation of the Taxes and Levies Act.

It said: “Tax authorities should desist from engaging the services of consultants, and agents to assess and collect taxes and levies listed in the Taxes and Levies Act as this is in contravention of Section 2(1) of the Act. States should be strongly advised to discontinue this action immediately.

“Mr. President is to issue an Executive Order to all federal MDAs to stop collection of taxes and levies in violation of the Taxes and Levies Act and also directing the Inspector-General of Police to dismantle all road-blocks across the federation for tax collection. Commissioners of Police will be required to ensure compliance within states.”