Mr Clement Akanibo is a chartered accountant and tax practitioner based in Port Harcourt, Rivers State. He has been in tax practice and financial services for over 10 years now, particularly in revenue generation. A former chairman of the Port Harcourt district of the Chartered Institute of Taxation of Nigeria, He spoke to TNN about the future of Internally Generated Revenue (IGR) in Rivers State. Excerpts:
From your wealth of experience, give a direction to Rivers State on taxation and revenue generation.
Well, the installed capacity of revenue generation for Rivers State is about N20 billion per month. But how much of this has the state been able to tap? Right now, the state achieves about N6 billion per month. This is not because the N20 billion cannot be achieved. The infrastructure needed to achieve the installed capacity is only not on ground. Example is data base. It's only civil servants and company people that are paying tax. But what about the informal sector that is about 70 per cent of the total population? These are not properly taxed; they have not been brought into the tax bracket. So, you discover that for you to harvest, you need to invest. This is one of the investments in which if you borrow money and invest, within six months, you can recover all your money.
If government decides to enumerate everybody in Rivers State and they all have tax cards, you discover that you will achieve it. If everybody contributes and pays the required tax, government can achieve the installed capacity of N20 billion. After all, when you look at Rivers State and look at Lagos State, even more quality
companies are in Port Harcourt than in Lagos. You see, the oil companies, maritime and the rest; then you talk about expatriates; many companies are not declaring the right number of expatriates they have. They hide their expatriates. So if the revenue authorities can work closely with immigration authorities and get on board all the expatriates, there will be enhanced revenue.
Before now, there used to be a system in which tax operatives would visit a community and taxable adults scamper into hiding. By advocating for a system that will capture everybody, are you looking at this method or something close to it?
You see, the tax payer is a king, you can't chase a king. He has to be tax-friendly. This is where the aspect of self assessment comes in. One of the rights the tax payer has is that he has to be seen to be honest. We have to believe that the tax payer is honest and declaring all his income, except where you have evidence to prove otherwise. We believe that the tax payer should willingly declare and pay his tax. Tax is now a friendly thing; all it requires is education or awareness. Let people know what tax they are to pay, at what time they are to pay, where and how they are to pay, then it will be done. With proper education of the tax payer, simplification of the tax process and provision of tax aid, people will be tax friendly.
If a taxable adult is not earning because of the economy, will you believe him when he says so and cannot pay anything?
In data capturing, it will be clear; are you working, how much are you earning, in which company are you working? If no income, of course you won't pay tax. But it is not true that year in year out, one does not have income. Here, one can be subjected to a flat rate because many people will want to hide under that pretence and not pay, and like you know, tax is the mainstay of government. If there is no money coming from taxation, government will collapse; they will not be able to do anything. So, it is important that people pay their taxes.
Over the years, the state operated far below average whereas it only needed infrastructural upgrade to record maximal taxation. Professionals like you and the members of the newly inaugurated board knew this but made no effort to help out, why?
In the past, the administration did not believe in professionals. They chose to go to Lagos and bring in a consultant who would do his own thing and share out resources and wander off. They did not even build the capacity of the staff of the board. They would come, take the place of the staff of the board, make all the money, share out and go away. Rivers State has been losing; there is nothing we have not said, even when the president of the Chartered Institute of Taxation came and we wrote to see the governor, he didn't want to see us. We made proposals and did all we could but they already had their own agenda on how to distribute the money. Apparently, the state has been stagnated just because of self-interest. But this is the first government that
has listened to us as tax professionals and we are saying that it is not good for people to come, use the internal revenue staff, add no value to the system and when they leave, they go with their data base. Meanwhile, government spent so much on them. We are happy with the present administration because the governor is ready to comply with the law that says a proper board should be established. This he has done.
What's the substance of the individuals in the new tax board that can move the state forward?
I know that the chairman is a very strategic leader. Before now, he has already mapped out his strategy on how to succeed, and I am sure he is just going to follow that road map which he has already drawn. This is not the first time he is doing it. He was a consultant to Skye Bank and piloted revenue generation in the state very well while there. That was when we started hearing of BIN card; that all companies should register and have their Business Identification Number (BIN). Within three months he succeeded in building a good data base in the state. So, I think he will put strategies down to succeed.
The operating capacity for the state now is about N7-10 billion monthly. As they are in now, they will put up structures and in the next one year, N10-14 billion will be achievable monthly. They will progress thereafter until they get to the installed capacity of N17-20 billion.
To achieve this, they have itemised all the tax items and will now look at it. The PAYE, what is the problem with it? You discover that 80 per cent of the total revenue is from PAYE. We could have got more than this. You find out that companies that have 100 staff, because there is no biometrics, they will say they have 50 or less. But we believe in self-assessment and allow them until we prove otherwise.
For me, this team is formidable because they are going to bring a new thing to the job.
Other areas such as tax study will help reveal anomalies. Also rent, any rent collected attracts 10 per cent tax. Properties in the state will be enumerated, especially the commercial ones. There is still much revenue in this state to be collected.
The board while being screened by assemblymen, talked of taxes from tenants whose landlords must document and from pupils and students in private schools whose parents could be traced through the schools their children and wards are enrolled in. What's your take on the workability of these?
Take for example the private schools, they have their associations. It's just to make it compulsory for them to design a format to capture the students and pupils in that school and the parents and what they do, where they live and phone numbers, etc. With such data base, you can easily interact and the people will understand that they are not hidden and will now be serious with tax payment. This is what happens in the developed countries. As go into them, they use your passport numbers to track you so that you are not hidden in your activities.