FIRS Mulls Road Tax Law to Increase Revenue Generation

FIRS Mulls Road Tax Law to Increase Revenue Generation
FEC recently approved a new toll policy.

The Executive Chairman of the Federal Inland Revenue Service (FIRS), Mohammed Nami, has disclosed that the Service is working on a bill to introduce road taxes for users.

Mr. Nami said the bill will include the use of electronic means to collect taxes from road users to enhance revenue drive.

He made the disclosure when he appeared before the House Committee on Finance at the interactive session on the Medium Term Expenditure Framework (MTEF) on Wednesday in Abuja.

According to Mr. Nami, the agency will send the bill to the National Assembly for consideration and passage.

There were reports that the Federal Executive Council (FEC) had last week approved the new road policy.

The policy is aimed at reintroducing toll gates on Nigerian roads.

Mr. Nami said though the Service is targeting N10 trillion for the entire federation in the 2022 fiscal year, the money will not be sufficient to fix all the roads in Nigeria.

“Road tax is necessary because all over the world there is no way we would see people that will use roads for free.

“As is it today, even if you can give an entire N10 trillion to the Federal Republic of Nigeria, it will not be able to fix the roads in Nigeria, just the roads in Nigeria alone.

“So what we have decided to do is to propose the introduction of road taxes to the federal government through our special tax operations department so that at least 50 trucks that would be plying these roads for free at any given point in time, come across a toll gate or probably somewhere that we are going to use electronic devices to collect it without necessarily erecting toll gate.

“We are aware that the owners of these trucks, they don’t pay anything to the government, they don’t get the FIRS certificate. So up to 15 or 20 trucks that will ply the road that is built with a personal income tax that I pay and you pay and then they don’t pay taxes. That is what we want to identify.”

The FIRS boss also lamented the challenges of incorporating the informal sector into the tax bracket.

He informed the lawmakers that the Service was considering ‘presumptive tax’, but had to drop it due to conflict with existing laws.

“What we have done on the informal sector at a time was trying to propose what we call a presumptive tax to the National Assembly. But in the course of doing that we face a bit of challenge and we did not submit the proposal yet, simply because we discover that there is an Act of the National Assembly that exempts businesses with a turnover of about N1 to N25 million,” he said.

“So if you already have that, you can find it difficult to say come and pay presumptive tax. Presumptive tax is a tax that we just give you form to say based on your estimate, how much have you generated this year and you say 12 million. Then we say pay maybe six percent of that 12 million and you go because you are not an organized sector.”

Giving the breakdown of the revenue performance of the Service 2021, he said the projected revenue collection was N6.40 trillion representing N1.64 trillion (26%) and N4. 76 trillion (74%) for oil and non-oil respectively.

“The Service as of June 30, 2021 (second quarter) achieved N2.762 trillion representing 43% of approved projected revenue collection. The non-oil revenue collection during the period was N2.118 trillion against N1.5 trillion collected in the correspondIng period representing 41. 2% Increase.

“While the oil revenue collected for the same period was N644 billion against N971 billion collected in the corresponding period representing 33.68% decrease in the oil collection.”

He also disclosed that the Petroleum Industry Bill (PIB) that was recently assented to could affect revenue projection in 2022, noting that the implementation of the Act could present some challenges for the Service.

“We expect that with the new Petroleum Industry Act, there are some reconciliations that will be carried out that might affect the projections for 2022. We expect that there is a new expenditure that will be rolled over to the new regime. So, what we are trying to do is to ensure that we adjust those expenses for the year 2022.

“We know that if we do that, it is going to affect our ability to collect more revenue in that area. There are currently some allowances they have been able to use, but they will use them because this will be a new regime. It is not going to be the one that has investment tax allowance anymore. It is going to be based on actual performance.”

President Muhammadu Buhari on Wednesday set up the PIA steering committee to be headed by the Minister of State for Petroleum Resources, Tmipriye Sylva.

The committee has the mandate to midwife the implementation of the Act within 12 months.

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