The Federal Government- constituted National Tax Policy Review Committee has recommended the merger of the Federal Inland Revenue Service and the Nigeria Customs Service.
The committee, headed by Prof. Abiola Sanni, was set up on August 10 by the Minister of Finance, Mrs. Kemi Adeosun.
The committee stated that the merger of both agencies would help improve administrative efficiency, reduce the cost of revenue collection as well as ensure accountability.
The draft of the reviewed National Tax Policy was presented at the committee’s second stakeholders’ engagement in Abuja on Tuesday by the West Africa Tax Leader at PricewaterhouseCoopers, Mr. Taiwo Oyedele.
The policy was first published in 2012 by the then Minister of Finance, Dr. Ngozi Okonjo-Iweala, to entrench a robust and efficient tax system in Nigeria.
Speaking at the event, Oyedele said the committee agreed that the current system was encouraging multiple taxation, tax evasion and wastage.
He described the current revenue generation system involving 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.”
Oyedele said that the committee was also recommending that a tax amnesty programme should be introduced by the Federal Government in order to widen the tax net.
He said currently, some companies and individuals were not willing to join the tax system for fear of being asked to pay huge accumulated tax liabilities.
He explained that a tax amnesty would assure that past offences would be forgiven, thus assisting the government to generate more revenue.
Other key recommendations of the draft policy include establishment of tax committee at the national level as well as administrative framework for amnesty and whistle-blowing.
Sanni said the need to increase the level of revenue generation informed the decision of the committee.
He said, “Our ultimate goal is to have a revised document that is slim, simple and concise; a document, which will impose duties and responsibilities on all organs of government.
“We envision a document that will eventually give a new lease of life to the Nigerian tax system and meet our taxation objective within the context of the peculiar Nigerian environment.”
Sanni said that the revised policy draft would be finalised at a retreat today (Wednesday) at which it would be submitted to the Finance minister for onward transmission to the Federal Executive Council for approval.