FAAC, Stamp Duty and economic diversification

One of the biggest positive news items in recent times away from the daily humanitarian crises of COVID-19 pandemic is the recent report that, at last, Nigeria is not only getting its fiscal policies right but it is setting records of successfully diversifying its national revenue base from oil to innovative tax reform that is harnessing hitherto latent revenue opportunities into the national coffers.

In specific terms, the recent introduction of Stamp Duty by the Federal Inland Revenue Services (FIRS) under the leadership of Mr. Muhammadu Nami and the initial phase of its implementation has boosted Nigeria’s national revenue generation by N80billion annually. Indeed, this is good news for Nigeria and the present government of President Muhammadu Buhari deserves a pat on the back.

For instance, reports show that in a rare leap since Nigeria returned to democratic government in 1999, the country’s revenue through tax contributed about 70percent (about N500 billion) to July 2020 federal allocation. Recall that every month, the Federation Accounts Allocation Committee (FAAC) shares a monthly statutory allocation to the three tiers of government – federal, state and local government.

This is not a mean feat for an economy that is generally measured by the amount it generates from oil on a daily basis. For me, this is the best news in Nigeria at the moment. It is therefore surprising that the media is not screaming loud enough on the success that took the nation protracted decades to achieve within six months of Mr. Nami on the saddle at the FIRS.

According to Mr. Nami, “During the FAAC meeting in July, the total amount shared among the three tiers of government – federal, states and local – was N696 billion. From this amount, only 30 per cent came from revenue generating-agencies like the Nigerian National Petroleum Corporation (NNPC) and the Nigeria Customs Service (NCS). The remaining 70 per cent, which is almost N500 billion, came from tax revenues paid by the various tax payers, including stamp duty,” he said.

Explaining further, the executive chairman of FIRS stated that “Before now, remittance from stamps used to be an average of about N17 billion and N18 billion per year. Currently, it is in the region of N80 billion”, adding that the commercial banks which were not used to remitting Stamp Duty before remitted about N1.2 billion in July alone.

If FIRS could achieve this huge result at a time of global lockdown where businesses were crippling and national economies taking a nosedive as a result of COVID-19, one can only imagine that the future is definitely brighter for our national revenue and fiscal sector.

It is ingenious for the present management at Revenue House in its plan to properly harness Stamp Duty and position it as the centerpiece of annual budgetary appropriation benchmarking. Surely, this is one of the biggest legacies of President Muhammadu Buhari administration. 

The only challenge before the Nami-led management at the FIRS is the question of sustainability. Can the FIRS sustain this creative and innovative drive? Are relevant stakeholders properly carried along in this new promising tax regime? Does it have enough courage to enforce relevant laws where applicable?

There are some persons and corporate entities that are more comfortable to live and do business outside of the law in this country; indeed they are in many parts of the world. How does FIRS plan to deal with such tough situations where they arise?

I am however very confident in the ability and capacity of Mr. Nami to handle the toughest bad guys in the sector, if not he would not have achieved the current tall feats within such a short period of his assumption of office. I therefore urge all stakeholders to join hands together with him and his management in order to ensure that they succeed. 

Nigeria needs more money than ever before to meet its growing list of expenditure in the face of dwindling oil revenue. The present administration is leading other successive administration in increased capital budget spending to fast racking infrastructural development in the country. It needs huge funds to tackle security situation, respond to every humanitarian challenges in any part of the country, be it IDPs, COVID-19, flood disasters, etc. This is why we need to support the FIRS.

(First published in blueprint 30 August 2020)

Saidu writes from Yola, Adamawa state