The Chairman Revenue Mobilisation Allocation and Fiscal Commission, RMAFC, Mr Elias Mbam, on Tuesday, disclosed that the federal government, its ministries and agencies, and states were owing taxes, to the tune of over N154billion.
Mr. Mbam raised the alarm, at a budget defence session with the House Committee on Finance, chaired by Rep. James Faleke(APC-Lagos).
According to him, “The Commission over the years, despite its poor funding recorded tremendous achievements including revenue monitoring and recoveries from both the oil and non-oil sectors. The activities and recoveries, apart from enhancing the Federation Account, have had deterrent effects on the revenue-generating agencies and helped to minimise revenue leakages.
These achievements include:“Recovery from Banks/Companies the monitoring, verification and reconciliation exercises which are still ongoing by the Commission on revenue collections and remittances by Commercial Banks, Companies and the agencies that collect/remit revenue to the Federation Account have helped to minimise leakages.
The verification which took effect from 2008 is still ongoing and was reported to the Stakeholders through the Federation Account Allocation Committee (FAAC) and the National Economic Council (NEC).
Sequel to the submission of Interim Report on the verification exercise and because of the tremendous result in terms of revenue recovery, NEC approved that the exercise is extended to 2019. As at date, over N75Billion has been recovered by the Commission.
Furthermore, a sum of over N474Million was recovered in the ongoing recovery exercise by the Custom monitoring Committee of RMAFC Recovery from the Three (3) Tiers and Agencies of Governments. He said.
“The Commission in collaboration with FIRS in 2020 conducted an exercise on the reconciliation and recovery of tax liabilities owed the Federation Account from 2008 to 2019 by some Federal Ministries, Agencies and Department (MDAs), States & their MDAs and Local Government Councils respectively. The exercise is ongoing! and over N79Billion liabilities have been established”.
On revenue from Solid Minerals, the agency disclosed that over N27 billion was shared to states, from revenue of N27billion in 2020, he, however, decried that government had incurred a loss of over a trillion naira in the sector.
“Through the efforts of the Commission, an account for the solid minerals sector was opened at me Central Bank of Nigeria (CBN) where proceeds from the sector were being paid. However, it is important to note that before the intervention of the Commission, the Solid Minerals Sector never contributed to the Federation Account. So far, over N31 billion has accrued into the account, out of which over N27 billion has been disbursed to the three (3) tiers of government, including the 13% derivation in which all the thirty-six (36) States benefited.
“The outstanding balance of about N4billion is awaiting relevant data from the Ministry of Mines and Steel Development for distribution to the 3-tiers of Government. Furthermore; the Commission conducted a nationwide monitoring exercise for the Solid Minerals Sector with the aim of examining royalty collections to the Federation Account & activities of Miners at the States & Local Government Councils for the period 2009 to 2015. This exercise is still ongoing; From the exercise, analysis carried out on ten (10) mineral types, namely; Gold, Tin-ore, Coal, Columbite, Kaolin Crude, Lead, Gypsum, Tantalite Crude, Zinc and Manganese taking into consideration their qualities, quantities and their international value, showed that the Federation was losing an estimated revenue of about N1.3 trillion annually”.
RMAFC, also sought the intervention of the House, to access enough funding to alter the revenue-sharing formula in the Federation.
The federal government has always taken the lion share from the Federation account, leaving the 36 states to share a lower percentage.
“The Commission has started the process of reviewing the existing Revenue Allocation Formulae. Preliminary works, including literature review, engagement with the major stakeholders, and collection of relevant data has commenced. However the process has been slowed down due to paucity of funds”, he pleaded.
The agency also sought independent management of Special Funds, i.e. Stabilisation Fund, Ecological Fund and Development of Natural Resources Fund for their respective purposes have been a source of concern to the commission because of the absence of an all-embracing management structure to manage the funds”.
Mbam, said “these funds sometimes are applied outside the objective of their establishment. The commission wishes to state that these funds are supposed to be kept in trust by the Federal Government on behalf of the Federation. Therefore, their management and operation should clearly reflect the purposes for which the funds were established. Accordingly, it is necessary that a management structure, which should include major stakeholders, be put in place to manage the Funds, with the secretariat domiciled in the Revenue Mobilisation”.
The Chairman of RMAFC, also pleaded with the House to amend certain sections of the Constitution, to enforce the direct allocation of Local Government funds, to beneficiary councils.
“The payment of statutory allocations due to Local Government from the Federation Account has been a major grey area in Nigeria’s fiscal operations. Allocations to the Fedéral and State Governments are paid directly to them while that of Local Governments are paid into the respective State Joint Local Government Accounts established by Section 162 (6) of the Constitution. However, these Joint Accounts are often subjected to manipulation and abuse by the supervisory authority of some State Governments.
“For an orderly and transparent fiscal operation at the Local Government level, their statutory allocations from the Federation Account should be paid directly to them instead of the Joint Account to avoid possible diversions and illegal deductions. This may require the amendment of the relevant provisions of the Constitution.
“Conflict between Provision of Section 162(1) and Laws Establishing Some Agencies of Government.
“Whereas Section 162 1) of the 1999 Constitution of the Federal Republic of Nigeria (As Amended) provides that All Revenues with few exceptions should be paid into the Federation Account, the laws establishing some Agencies of Govern ent grant them authority to collect, retain and use revenues but remit on y the operating surplus to Government Coffers. In most cases, these Agencies do not even remit anything at all to Government. The Commission is of the view that such laws should be reviewed and all revenues collected by such Agencies of Government paid to the Federation Account as provided in the rule ant Sections of the Constitution. Furthermore, the Commission recommends that necessary steps be taken to reconcile Section 162 (1) and Section 80 (1) of the Constitution with the view to determining which agencies of government should remit revenue into the Federation Account”.
The Chairman of the Committee, while commenting on the presentation of the Commission, said the Committee will address their concerns.
He, however, warned the agency not to operate beyond its statutory mandate of mobilizing funds.