A recent reform, which identified more than a few deficiencies in the methods and ways of revenue collection as well as shortcomings bedevilling the Gombe State Internal Revenue Service (GIRS), seems to be yielding the desired fruits. From just N500 million and N6.8 billion as monthly and annual internally generated revenue (IGR) in 2019, the state now enjoys better annual IGR out-turns, with N8.6 billion and N10.5 billion in 2020 and 2021. SOLA SHITTU reports
Right from the outset, Gombe State Internal Revenue Service (GIRS) had a lofty dream: to be the top performer and most efficient revenue collection agency among states in the country. Yet, in the year 2019, with just N500 million and N6.8 billion as monthly and annual internally generated revenue (IGR), (GIRS) was battling with myriads of problems. Challenges included lack of administrative and financial autonomy, ineffective governance structure with overriding powers of the Executive Chairman with non-Executive Directors; uncoordinated collections by state and local government areas, culminating in multiplicity of taxes; significant revenue leakages; unprofessional conducts; lack of transparency and accountability, among other issues.
In addition, GIRS had to cope with an aging workforce and lack of a robust ICT platform that combines all the attributes of e-payment from e-billing, e-filing, e-assessment, e-objections, e-reporting, etc. The absence of revenue offices in other LGAs also undermined effective revenue mobilisation in the state. These, perhaps, were the issues that prompted Governor Muhammadu Inuwa Yahaya to embark on a reform exercise to reposition GIRS in a way to make serve the people of Gombe State more efficiently.
The report submitted by the committee set up by Governor Yahaya pointed out other complicated issues: impersonation of revenue staff; fake receipting by staff and other vendors; collection of revenue in kind; some revenue staff of the local government collectting perfume, clothes, shoes, sandals, women and children wears (etc.) in lieu of taxes. Others were poor administration of motor licensing unit and issuance of fake insurance and vehicles papers, reliance on old revenue types and obsolete rates; inability of GIRS to conduct periodic tax audit due to lack of capacity and training; lack of effective collaboration among and between revenue-generating MDAs, lack of taxpayers’ compliance due to deficit of trust and poor communication and citizens’ inability to hold government accountable due to lack of information.
The challenges were so daunting that Governor Yahaya, on assumption of office in May 2019, said with such a complex situation on the ground, his administration had no choice but to embark on a reform of GIRS in such a way that it would be in a position to generate more revenue for the state and compete favourably with other states’ revenue-generating agencies in terms of performance and efficiency. “With the dwindling revenue to the state governments from the federal government, a serious state government has no choice but to look inward,” he said.
Consequently, Mr. Abubakar Inuwa Tata, was appointed as administrator of GIRS. He is saddled with the responsibility of reforming the organisation. “In the last two and half years while reforming the system, we were able to provide coordinated collections (harmonisation of LGA rates and levies and collections); made the GIRS as sole revenue collection agency; ensured transparent and accountable revenue collections by producing periodic reports on revenue performance; addressed the issue of multiplicity of taxes through codification of tax and revenue types and institutionalisation of Joint State and LGA Revenue Committee; strengthened of internal control process to punish unprofessional conduct; prohibited cash collections by revenue officers; expanded the board structure of the Service to enhance accountability; encouraged voluntary compliance through tax education, palliatives and tax concessions; gave legal backing to LG Revenue Committee; provided a platform for the implementation of Treasury Single Account; replaced old and obsolete rates inherited from Bauchi State; provided new tax heads emerging from the evolution of economic activities; redefined the state into urban, semi-urban and rural areas to ensure equity in tax administration; redefined Micro, Small and Medium enterprises to properly delineate entities from each other in the implementation of presumptive tax regime, among many others,” he said.
Tata said his major achievements in the GIRS can be viewed from two dimensions: revenue generation and reforming the GIRS, which attracted grants from the World Bank. “On revenue generations, we sponsored a complete wholesale review of the entire Revenue Administration Law 2018 to Gombe State Revenue Codification and Consolidation Law 2020, reviewed obsoletes rates, fees, fines, levies, and charges, which enhanced collections by the Service in collaboration with the MDAs; streamlined revenue generation process, resulting in a clearly delineated revenue heads of the state government away from revenues collectible by the 11 LGAs; improved revenue outturn from N6.8 billion in 2019 to N8.6 billion and N10.5 billion in 2020 and 2021, respectively; successfully completed the back duty audit of N1.0 billion and N4.9 billion as an established, undisputed and agreed amount to be collected this year and or early next year,” he said.
The new management of GIRS inherited a highly indebted agency, just like the state government, with poor governance structure that undermined collections. The Directorates in GIRS were manned by Non-Executive Directors, which affected internal governance. “We empowered the Directorates in the Service to be headed by Executive Directors by amending the Service’s enabling law; we unbundled the existing Departments from eight to thirteen to enhance efficiency in service delivery. We drafted the mission and vision of the Service to reflect the current vision of the state government of a transparent and accountable modern institution capable of mobilising sufficient revenues and being managed by professional staff.
“On staff motivation, we met a system that rewarded mediocrity and poor compensation system that encouraged wrongdoings with significant cases of absenteeism and lateness to work; irregular payment of staff allowance, which we inherited about six months backlog; lack of training and retraining of staff; little or no learning opportunities and motivation to work extra hours. We introduced a performance-based allowance for staff that meet their revenue target from irregular 50% to 100% of their basic salaries across all categories of staff; streamlined benefits system to support staff at period of joy and sadness; regularised employment of about eight staff members who were working in the Service without a letter of employment.
“We also created learning opportunities for staff who want to become members of professional bodies by reimbursing staff with total amount of all receipted expenses during such training that the Service approved, which saw an increase in the number of professionals from two (2) to seven (7); trained 467 staff in 39 thematic areas; increased allowances of non-accountable cash advances for all categories of staff, introduced local NATA and weekend duty allowance to meet revenue targets,” he said.
On the relationship of GIRS with third–party consultants and vendors and MDAs, Tata said his management met a system that rewarded consultants as much as 25.0 – 30.0 per cent of collections or recoveries made and, in some cases, the revenue had to go to the consultant account first, before the consultant settled with the government. “We immediately invited all the consultants for a review meeting, discontinued the unwholesome practices and reviewed their commissions/fee down to 10.0 per cent for all categories of consultants, excluding the ICT lead consultant, which we proposed downward review as the consultant seeks renewal of his contract. We equally reviewed downward the fees being collected by all payment gateways from 1.5 per cent to 1.0 per cent and put a cap on the maximum amount to be charged per transaction in order to increase the efficiency of tax administration in the state and introduced 5.0 per cent cost of collections for all MDAs to enhance collaboration and cooperation.”
On reforming the GIRS and tax administration in the state, the new management was able to provide non-debt financing resources to the government through the attainment of State Fiscal Transparency, Accountability and Sustainability (SFTAS) Programme for Result directly under the Service’s core mandate, which includes US$2.5 million grant for Covid-19 Tax Concession and Palliatives, US$1.0 million grant for banning the use of consultants in assessment and collection of personal income tax, US$2.0 million grant for successful completion of the Revenue Codification, Harmonization, and Consolidation Law, US$1.0 million grant for the TSA Cash Management Strategy Document and Implementation, which the Service worked on and published as the Secretariat of the TSA Implementation and Enforcement Committee, Supported and provided regulation for accessing US$2.0 million grant for property enumeration in the state by capturing and creating G-TIN for 85,759 property owners in Gombe State, thereby effectively bringing the property owners into the tax net; and the likelihood of assessing additional US$1.0 million grant on year-on-year increase in revenue up to 20.0% of which the Service achieved over 26.1 percent.
Other achievements included the IGR Expansion Strategy Document (2023 – 2027), which was prepared by DAI (USAID) for the State Accountability, Transparency, and Effectiveness (State2State) project with active participation of relevant stakeholders in the state. He said if the strategy is implemented in the short to medium term, it is capable of boosting the state IGR to another historic level as projected in the Gombe State 10-year Development Plan (DEVAGOM). The recently constituted Gombe State Revenue Recovery Tribunal is another landmark achievement under the administration of Governor Inuwa Yahaya.
“We initially nominated a magistrate in 2020 law to adjudicate on the issues of tax and revenue issues because the use of normal judicial system is likely going to delay prompt dispensation of justice and that’s why the Service amended the law in 2021 to institutionalise a special tribunal that would protect both the taxpayers and the tax authority in case of dispute as an independent body. This is likely to enhance accountability and transparency of tax administration in the state while protecting both the taxpayers and the Service.
“The revenue of the state before our arrival at the revenue Service was specifically N6.8 billion for 2019. However, with all the initiatives and the reforms highlighted above, the Service was able to shore up collections to N8.6 billion and N10.5 billion in 2021. This development is not unconnected with the palliatives and concession given to taxpayers during the Covid-19, which acted as arrears clearing opportunities for the taxpayers who enjoyed various categories of waivers from 5.0 to 50.0 per cent of their uncleared tax liabilities and continuous engagement of the taxpayers through focus group discussion, tax education program, live television and radio programmes, jingles and other electronic handbills, among many others,” he said.
On the possibility of the state becoming financially stable and stopping reliance on monthly federal allocations, Tata said the state has all the potentials to be independent provided the leadership and the governed reach a consensus to grow the local economy. According to him, taxation is about a social contract between the citizens and the government and once both agree to contribute their quota to the development of the state and the government uses these resources efficiently and in a transparent manner through tax for service initiatives, definitely, the state would mobilise sufficient resources for its development.
Challenges
According to Tata, the current initiatives of the state government to open up the local economy through the industrial park, the Wawa-Zange grazing reserves for livestock production, the attractive and friendly business environment and solid infrastructure being laid are capable of boosting future revenue of the state. However, the successes recorded so far by the GIRS are not without challenges as some business owners in the state still complain of multiple taxations.
But Tata explained that there is a fundamental misconception of the word multiple taxation among taxpayers. “Multiple taxation occurs where the tax, fee or rate is imposed on the same person in respect of the same liability by more than one state or local government council. By this, it means that if the state government is collecting let say ground rent from a taxpaying entity, in this case, the liability is ground rent, and a local government council is also collecting ground rent on the same person or taxpaying entities, such practice can be termed multiple taxation. However, if a state government serves you with a demand notice on ground rent and local government serves you with a demand notice on tenement rate, that is not a multiple taxation as long as the liability is not the same.”
On why different taxes were introduced, especially for commercial motorcycles and Keke NAPEP riders, the chairman said the GIRS has not introduced different taxes. He stated that the taxes have been there for long but not domesticated and implemented. “What we did was to domesticate most of the taxes that are in the law of the Federation of Nigeria and legislate them in the state so that the Service will be able to enforce them in the state. That apart, the reason we conducted the biometric data capture for the motorcycles and tricycles in the state is for security, empowerment and revenue generation. You are not unmindful of the fact that the use of okada and keke has been banned in more than ten (10) states in Nigeria. These include Borno, Yobe, Adamawa, Jos, Kaduna, Kano in the North due to increasing cases of insecurity associated with their operations. Many of these riders relocated to Gombe State in order to continue with their operations and if left uncontrolled, unchecked and unregulated, they can constitute a security risk to the state as many of them came from different states with different habits and culture.”