Lagos has created environment suitable for ease of doing business -Ashade

Mr.Akinyemi Ashade is the Lagos State Commissioner for Finance. In this discourse, he reveals how his ministry has fared in the last one year. Issues ranging from recession, Internally Generated Revenue, the tax regime and matters of multiple taxation, civil servants’ welfare, issuance of bonds, the contentious Land Use Charge, among other critical subjects. BENJAMIN OMOIKE reports.

How would you rate the performance of Lagos State in the last one year, especially in the face of recession?

Let me say we are happy to receive the news from the United Kingdom based World Economics, that the Nigerian economy is growing out of recession. The administration of His Excellency, Mr. Akinwunmi Ambode has contributed in no small measure by providing a conducive, safe and secure enabling environment for businesses to thrive.

We have equally embarked on massive infrastructural development and renewal with strong patronage of indigenous contractors which has helped in building our Gross Domestic Product. Strong and prudent management of financial resources have helped us to achieve more with limited resources and this has helped us in no small measure to achieve what we have been able to achieve in the last one year.

In terms of revenue generation, how would you score your ministry?

In 2016, the existing strategic financial management framework of the state’s resources was steadfastly sustained and this resulted in steady improvement of the state’s revenue.
A total revenue of N436.328 Billion was realized in the year 2016 compared to N399.382 Billion in 2015.

In relative terms, the revenue performance was N36.946 Billion more when compared with the year 2015. Total Internally Generated Revenue (IGR) for the year 2016 was N312.820 Billion which represents 75 per cent of the projection and 72 per cent of Total Revenue, compared with N247.946 Billion representing 80 per cent of the projection and 69 per cent of total revenue for year 2015.

Lagos State Internal Revenue Service (LIRS) revenue for year 2016 was N247.022 Billion representing 80 per cent of the estimate, 79 per cent of total IGR and 57 per cent of total revenue when compared to N225.041 Billion which represented 81 per cent of the estimate, 79 per cent of IGR and 56 per cent of Total Revenue for the year 2015.
There are reports of some reforms put in place in this regard, could you let us into them?
Lagos State Internal Revenue Service (LIRS) was able to achieve the feat they did because of the strategic reforms introduced in the area of revenue collections.

Some of these reforms Include; Revision of Tax Form A: The tax form was redesigned from a six-page modular form to a two-page form with three language options (Yoruba, English and Pidgin).

We also had the introduction of Electronic Submission of Annual Returns. Also, there was the activation of 1 per cent statutory incentive for voluntary compliance and self assessment in line with (Section 45 of Personal Income Tax Act).

We created Customer Care Desks in all 38 Tax Stations of the Agency and the introduction of a dedicated customer care line (0700 CALL LIRS). We cannot forget the introduction and application of multi-modal payment portals including POS, MPAY, Online Payment etc, to complement traditional payment portals at banks.

There were vast reforms in Tax Audit Processes to reduce turnaround time and improve efficiency. A new Tax Audit Manual was also launched while Tax Audit Monitoring Agents were engaged under conditions that are more beneficial to the state.

We ensured strong collaborations with the FIRS and other MDAs with an improved information exchange regime which enhanced the culture of Tax Compliance amongst the taxpaying public.

In line with the culture of continuous improvement, LIRS is currently enumerating tax payers in the informal sector across the 57 Local Government and Local Council Development Areas, with the ultimate aim of building a robust data base, with the clear vision of increasing the state’s revenue generation capacity.

The Agency has commenced the process of deploying technology to report consumption tax transactions online-real time through fiscalisation of consumption tax across the state.

Could you throw more light on the state’s acquisition of the former Elephant Cement House?

We are happy to report that Lagos State Government has acquired the former Elephant Cement House at Central Business District, Alausa, Ikeja.

The structure named Lagos Revenue House is to further consolidate on the “one stop shop” policy of this Administration, where all key revenue generating agencies operating outside of the Secretariat will operate from a common location.

The edifice will accommodate allied MDAs and provide better opportunities in galvanizing our technology applications to improve the state’s data base for adequate financial planning as well as to reduce cost of governance.
One area of concern for Lagosians is the issue of Land Use Charge.

Property taxation is another source of Internally Generated Revenue for Lagos Sate Government.
In the last one year, more payment channels were introduced to cater for the large number of people that need to pay Land Use Charge.

In some cases, Banks were encouraged to establish their presence at Tax and Revenue centers including LUC centers to reduce incidence of cash transaction and attendant frauds that may arise.

I am happy to inform you that those innovative ideas have drastically reduced incidences of fraudulent practices and provided easier access for payment.

We have continued to make use of advocacy and publicity campaigns to further enlighten the tax payers on the payment processes and procedures.

These innovations and public awareness campaigns, have drastically increased our Land Use Charge (LUC) revenue generation from N6, 244,821,023 in 2015 to N7,156,883,229 in 2016. In the first quarter of 2017, LUC collections stood at the sum of N3,990,690,508.

On tax payers, multiple taxation and challenges?

As part of our engagement with tax payers, the Ministry participated in the 2016 Lagos International Trade Fair to sensitise the public on the need to pay their taxes/levies particularly the Land Use Charge and to showcase services rendered by the state government to its citizens.

We equally used the opportunity of the Trade Fair to attend to and sort out complaints on Land Use Charge bills. Tax payers also used the opportunity to effect payment of outstanding obligations.

The Ministry organised a stakeholders’ meeting to address various issues bothering on Taxation and Revenue, especially complaints from different organisations on issue of multiple taxation as it affects bills from the various levels of government.

The engagement created an avenue to commence our reforms on harmonisation of taxes and elimination of multiple taxation, which is central to ease of doing business.

We will continue to enlighten tax payers on the harmonised rates in respect of local government levies and rates and our reform will culminate in the introduction of automated billing systems at our Local Governments (LGs) and Local Council Development Areas (LCDAs).

For complaints/ enquiries on payment of Land Use Charge, four dedicated telephone lines were opened to the public which include: 09029075743, 0817777782, 0902995642, 0809392939. Rate payers are advised to use these lines to sort out complaints on Land Use Charge matters.

The Land Use Charge Assessment Appeal Tribunal which is a creation of existing law will continue to provide opportunity for the public in resolving LUC issues by mediation instead of going to regular courts.

In the last one year, the tribunal treated over 500 cases. 195 of those cases were resolved amicably and payments made immediately by the property owners. While the others which involved minor amendments to the bills were also resolved amicably.

What is the Central Billing System all about?

The Central Billing System was introduced towards the end of 2016. It is an official platform created to generate bills centrally for Ministries, Departments and Agencies (MDAs) of Government and further facilitate the monitoring of revenue accruable to MDAs, improve collections through the introduction of various payment gateways which will minimise revenue shortfalls, increase human capital efficiencies and ultimately expand Internally Generated Revenue of our state.

It will also support the determination of outstanding bills at the end of each period for International Public Sector Accounting Standard (IPSAS) reporting purpose on Accruals basis. A System Unique Customer ID is created to track customers, monitor transactions and track payments via various payment gateways.

Four pilot MDAs are already on the system and I am happy to inform you that plans have been completed to include the Land Use Charge into the system before the end of the month.

We have heard of the Land Automation (Lagos State Enterprise Geographic Information System). Could you throw more light on this?

The state government is on the verge of automating its land Administration thereby authenticating land titles. This will facilitate unhindered and secured access to land as a factor of production, and encourage investors.

It is expected that the process will assist tremendously in the administration of Land Use charge as a one stop shop innovation. This simply means that at the press of a button on your computer i.e desktop, laptop or even a smart phone you can access and view any landed property in the state and consummate transactions with ease.

The implementation of E- GIS will also assist our state greatly in optimizing revenue collection for Land Use Charge.

The benefits of E-GIS platform and integrated land automation administration system include improved investors’ confidence locally and internationally and the attendant improvement in the ease of doing business, production of accurate Land surveys and proper monitoring of government infrastructure.

Other benefits include cost effectiveness and optimisation of revenue collection for Land Use charge, easy access to land and property information of Lagos State from any part of the world using desktop or mobile devices and reduction in transaction costs and increase in incentives for private sector Investment.

How far about the Lagos State Bond Issuance Programme?

The state government has continued to utilise the Domestic Capital Markets to raise funds through Bond Issuance Programme in line with its vision of using sustainable budgetary deficit arrangements to grow the state’s GDP.

In line with our medium of long term finance strategy, the N500 billion Bond programme was established in December 2016 with the N47 Billion bond being its first tranche raised from the Capital Market.

We are at an advanced stage in line with 2017 Appropriation Law to approach the capital market for Issuance of N100 Billion bond in series 11 through book building subject to regular provisions.

While the state government is pursuing the N500 Billion Bond Programmes, it has continued to ensure a strong and healthy debt sustainability regime leading to Improved Local and International ratings for the State and its Debt Instruments.

In February 2017, Fitch Ratings (An International Ratings Agency) affirmed the Long-Term National Rating at “AA+” (a ng) with a stable Outlook.

Sequel to the approval of Lagos State Government Development Policy Operation (LSG) DPO III by the Federal Executive Council and in compliance with conditions precedent to draw down, the World Bank approved the disbursement of the third tranche of USD 200 Million facility in April 2016 to the state.

The state government has been servicing its external debt consistently with the Debt Management Office (DMO) in Abuja, deducting at source from the State Government Statutory Allocation to effect repayment of both local and foreign loans.

The state government transited in May 2016 from bullet payment to amortized payment to free up funds and reduce the state’s liabilities annually by paying bond holders principal plus coupon interest in installments.

The state equally restructured its internal loan portfolio with Commercial Banks in 2015 to 10-year tenor at a competitive rate of 12 per cent from an average of seven-year tenor at 17 per cent.

Although this gain has been eroded because of adverse Monetary Policy Rates by the Central Bank of Nigeria (CBN), we are very optimistic that Lagos State will continue to enjoy good rates and tenor commercially with its current rating locally and internationally.

In terms of Bond Redemption, what is your take?

The commitment of the state government to its debt obligation as and when due was further demonstrated with the redemption of the N57.5 billion bond ( Series 2) 2010 /2017, which matured on 19 April, 2017. This marks the maturity of the Series 2 Programme 1 Bond.

However, the N80 Billion, N87 Billion and N47 Billion will be redeemed in November 2019, November 2020 and December 2023 respectively. The state has accumulated over N103. 415 Billion in our Sinking Fund Accounts managed by Independent Trustees for the redemption of the outstanding Bonds.

On welfare programme and issuance for public servants?

In its commitment to continuously ensure the best welfare for its work force, the Akinwunmi Ambode’s administration ensured prompt payment of all employees’ monthly salaries (active, Local Government and SUBEB) on or before 23rd of every month in spite of the competing needs for the limited funds available.

Pension Redemption Bond Fund was created to cater for the payment of outstanding pension liabilities due to the retirees in the old pension scheme. An average sum of N1.009billion is being paid monthly by the state and local government as contributions to the 5 per cent Pensions Redemption Bond Fund for Active, SUBEB and Local Government employees.

In furtherance to this, an additional sum of N250 million is being remitted monthly into the Pension Redemption Bond Fund.

The state government gives priority to the staff Contributory Pension Scheme with regular monthly deductions of 7.5 per cent from staff salaries in the State, Local Government and SUBEB, and corresponding 7.5 per cent average monthly contribution by the state government.

In the spirit of all inclusive governance, His Excellency, through the State Treasury Office set aside N1.5 billion for the payment of accumulated pensions and gratuity of retired Local Government and SUBEB employees which has been in arrears since 2001.

Lagos State government has commenced the payment of Local Government monthly pensions through the Oracle Application for proper electronic processing and documentation, with a view to minimize paper work.

This had successfully been achieved in the active Civil Service, Teaching Service and the Judiciary.

In the area of insurance for Public Servants, a total number of 53,382 employees in the various MDAs benefited from the Global Life Insurance Policy of the state government which ensures that all staff are insured against accident, temporary and permanent disabilities as well as death while in active service.

N160,049,636.55 was paid as death and group personal accidents benefit to deceased beneficiaries and members of staff of MDAs in the last one year, while a sum of N7,408,710.90 was received into government coffers as temporary disability benefits from Insurance Companies in September 2015.

In September 2015, the committee of Local Government Administrators approved the direct deduction of N63,711,178.86 on monthly basis from the JAAC (Joint Account Allocation Committee) of the Local Governments / LCDA’s and SUBEB.

This deduction is for the settlement of the Group Life/Personal Accident Insurance premium of SUBEB and LGA/LCDA staff and this arrangement is ongoing.