By Tunde Opalana
Internally Generated Revenue (IGR) of states in the federation has risen from N1.31 trillion in 2019 to N1.67 trillion in 2021.
This is as the share of IGR as percentage of total recurrent revenue grew from 31% in 2019 to 35% in 2021.
Chairman of the Nigerian Governors’ Forum and Ekiti State governor, Dr. Kayode Fayemi who said this on Monday at the 8th IGR Peer Learning review meeting of States Finance Commissioners in Abuja, however cautioned that state governors must not lose sight of the need to sustain and advance the momentum of reforms, considering the decline in Federal Accounts Allocation Committee (FAAC) receipts.
The Forum launched the Nigeria Governors’ Forum (NGF) Public Finance Database, which is Nigeria’s first reference database for State-level public finance data.
This database, he said, reiterates the governors’ commitment to fiscal transparency and accountability as well as resolve to strengthen governance in the country.
The database, he added, allows users to easily filter and analyse states’ fiscal data and information.
The renewed effort by governor’s, he added must take into consideration the emerging dynamics surrounding private income in Nigeria today including “the devaluation effect of the rising inflation rate, structural transition in employment, business dealings and investments, driven by the evolution of technology.”
Beyond the laws and regulations, we have passed, Fayemi charged the governors to occasionally by policy respond to the fast-changing tax environment, if they must stay ahead of evasion and avoidance tactics.
“We recognise the need to support our internal revenue services and continue to empower them with the necessary political support and financial resources required for them to execute their mandate effectively. We remain committed to keeping this pact. However, mutual accountability must exist – to whom much is given, much is expected.
“Broadly, we must seek out ways to expand the tax net and improve our taxpayer database. This will require ending the proliferation of taxpayer identification numbers and databases. It is pertinent we harmonise; leveraging a unique identification number as is global best practice.
“For us to achieve this, information sharing between jurisdictions must be seamless, not only between the tiers of government but also inter and intra-State. I would like to encourage the Joint Tax Board (JTB) in its pursuit for a plausible solution to this anomaly.
“On strengthening public legitimacy for tax collection, we have improved the transparency not just around tax revenues but the entire treasury. Today our budgets and audited financial statements are not just publicly available but also in citizen-friendly versions. This will be supported by the NGF Public Finance Database which we will be launching today.
Asking the state executives to understand the need to build greater accountability, especially showing citizens the linkage between their taxes and service delivery, he said governors are working with revenue services and other MDAs to expand tax-for-service initiatives in rewarding compliance while ensuring citizens know where we expend their taxes annually.
“I am optimistic about the tax reform journey and believe even within the time some of us have left, we can achieve a lot. As is often said, government is a continuum, so I trust those after us to continue in these reforms and many more, as may be necessary in guaranteeing the fiscal sustainability of our States,” he said.
In his address, Asishana Okauru, Director General of NGF said the open-source database of the fiscal data of the 36 state governments will host comparable annual data on government spending, revenues, and financing in all states, and will feature hundreds of performance indicators that measure the quality of public spending and the intersection of public financial management and service delivery in the country.
He said these reforms, when properly integrated in the tax administration system, are capable of scaling up effective organizational management, the quality of taxpayer services, taxpayer compliance and tax revenues.
The Director General said: “With our engagement with states, we have seen that where tax authorities have been fully supported by state governors, administrative reforms have led to increased digitalisation, taxpayer compliance, and tax revenues. This accounts for the increase in IGR over the last few years, particularly last year when it rose from N1.3 trillion to N1.7 trillion in 2021. At 35% of the total recurrent revenue of states, IGR definitely plays a major role in state-building today than in the past.
“Our tax reform work will feature significantly at our forthcoming induction programme for new and returning governors which will hold after the general elections next year. The induction programme is organized as part of NGF’s onboarding plan for new and outgoing governors as they transition into new roles.
“The visibility of economic, social, political, and environmental challenges today, and the expectation for immediate action places a heavy burden on State governments for timely action.
“Through our IGR programmes we will continue to help States close their capacity gaps by continuing to share innovative practices that have worked and by demanding action from governors to support the work you do.”