FIRS: The picture is here!

Opinion

By Abiodun Komolafe

We are in a time of pronounced change of thinking in a positive direction in Nigeria after decades of misadventures. To support this change, we must focus on the key policies and drivers of reform in order to assist them in their endeavours. A crucial aspect of this transformation is transitioning from a consumption-based economy to one driven by productivity, essential for achieving sustainable development. To achieve this, there is an urgent need for the prioritization of revenue collection to redirect Nigeria’s very economic foundation. While we may not subscribe to the ‘great man theory of history’, the individual chosen to drive the process is indeed vital. In this context, the country’s chief revenue-earning driver plays a critical role, making him or her indispensable, especially in the situation we have found ourselves as a country and people.

In the case of Nigeria, empirical evidence has shown that the ascent of Zacch Adedeji into the propeller of the engine room of the revenue collection process was imaginative and well-considered. Matter-of-factly, this is the first time Nigerians are seeing a seriousness of intent to move the country towards sustainable development on the part of the government at the centre and Adedeji must be commended for being at the epicenter of this effort. At a time like this in the history of global economic downturn and diminishing purchasing powers, an increase in government revenue without any corresponding increase in taxation is an attestation to one’s being on top of one’s job - that one has the managerial nuances to do the right thing because the country needs revenue without digging overly deep into extra tax regimes.

The Federal Inland Revenue Service (FIRS), under Adedeji, has started on a good note. It has done so impressively well that, less than one year in office, it recorded its highest tax revenue in six months and set an ambitious N19.4 trillion revenue target for 2024. Unlike Kenya and Argentina which faced challenges in managing their revenue collection, FIRS has successfully shown that ‘widening the tax net’ shouldn’t be interpreted as “being forced to pay but willingness to pay.” FIRS’ approach has shown that, if taxes are used properly, people will not hesitate to pay! In a word, that Nigeria has avoided the road to Kenya and Argentina is a plus for the “consequential agency.”

Towards complementing President Bola Tinubu’s fiscal reforms, FIRS has created an environment that’s conducive for growth. It has introduced and implemented far-reaching fiscal reforms in specific areas like Innovation and Technology, Voluntary Tax Compliance, Data-Driven Strategies, Open-Door Policy, Tax System Simplification and ISO Certification. The Service has also migrated from annual filing of Transfer Pricing Returns and Country-by-Country Reporting notifications from e-TPPlat to TaxPro-Max Platform even as it has also waived administrative penalties previously imposed in accordance with Income Tax Regulations.

Governments use tax incentives “to help increase economic development” and incentivized taxes make it less expensive and more profitable for a business to function. If intended and applied according to plan, tax incentives can attract investment to a country, increase employment as well as lead to a higher number of capital transfers. They can also encourage research and technology development, and bring improvement to less-developed areas. With these, even more, in mind, the introduction of means to encourage increase in tax compliance rate by the government becomes imperative. 

Reform in any form generally refers to the process of altering, improving or correcting a system, institution, or practice to make it more effective and equitable. The overall objective is to achieve a specific goal or set of goals. Reforms can have far-reaching impacts, and their effects may vary, depending on the specific context, implementation and stakeholders involved. Among its many positive advantages are improved efficiency, increased transparency, enhanced accountability and economic growth. Others are encouragement of investment, improvement in public services and enhancement of social justice.

That said, resistance to reforms can rear its ugly head in many ways, ranging from institutional inertia, public apathy and opposition from vested interests to disinformation, political or ideological disagreements and resistance from, or lobbying by, those who benefit from the status quo. Among others are intimidation, political polarization and passive-aggressive behaviour.

Reforms can be a periodic moment of sacrifices for future benefits. It can also involve temporary disruptions to existing systems. Expectedly however, reforms have always been met with criticisms, skepticism and impatience, especially during the gestation period. In most cases, these may lead to media trials, raising and sharing of unsubstantiated allegations and the like.

Assuredly, FIRS is on a good foot. It is also doing the right job. Thankfully, the reinvigorated Service is being led by a shrewd accountant, corporate tax and public finance expert. He is an icon of capacity, competence and visionary leadership. Without a shred of doubt, he is one valuable member of the President’s team who has exhibited great political will, especially by shifting the course from the belief that the national government cannot generate enough revenue without raising taxes. But then, the journey to reform is not without challenges. So, FIRS as an important agency of the government must avoid distractions. It must at all times demolish cyber mischiefs, deal with insider connivance and prevent lousy merchants of retrogression from hijacking the gains of the very good start that it has made. For example, there may be companies which may not want to pay their taxes and will want to rubbish, especially, its leadership. Ethno-religious dimensions to disruptions may also not be ruled out! After all, in a war of this shape and size, ‘win na win!’

Well, insider connivance may not be anything strange or surprising in a clime like ours because any reform-compliant organization worth its mission is bound to face this type of fight-back from reactionary forces whose remit is in rolling back the tide of progress. So, the Service’s path must be well-illuminated to discover and destroy traps from afar. Yes, the tasks before FIRS shouldn’t just be seen as a favour but a battlefield that requires formidable and effective security mechanisms which will ensure that insider distractions won’t survive in the Service.

The essence of the media is to stabilize society! But society cannot be stabilized by taking public naivety as an advantage and an avenue to shove innuendoes and factual errors down the people’s throats. To this end, while FIRS shouldn’t hesitate to develop legs strong enough to dance to a music, it must also strive to address contrived disruptions by reactionary forces who expectedly will want to resist the new thrust of policy that the country so vitally needs; otherwise, it may indirectly be adopting a ‘blowout’ strategy in which case it will become a recurring decimal because the blackmailer never goes away! Coincidentally, this is the age of multimedia and the seriousness of the situation may draw its oxygen from the fact that bad news is not only noisier but also “sells because the amygdala is always looking for something to fear.”

As Nigeria moves forward, FIRS must always foster a culture of transparency and accountability. It must also encourage internal whistleblowing and protect whistleblowers. Besides, it will be in the interest of the apex tax authority in Nigeria to strengthen internal controls and audit processes, and engage in effective communication and stakeholder management. Last of all, the Service must stay focused on its mandate and goals because once Nigeria’s internal revenue mechanism is not top-notch and internationally competitive, a sure road to derailment in her monetary policies and internal stability beckons.

May the Lamb of God, who takes away the sin of the world, grant us peace in Nigeria!