The Federal Capital Territory (FCT) and four other states have recorded substantial growth in taxes and Internally Generated Revenue (IGR) between 2020 and 2021.
Figures by the Nigeria Governors’ Forum (NGF) revealed that the states with remarkable growth include Sokoto (6,824%, N7.5m to NGN519.5m in direct assessment), Niger (1,951%, N1m to N2.07bn in MDA revenue), Jigawa (157%, N1.4bn to N3.8bn), Kogi (728%, N444.8m to N3.6bn in Other taxes), Osun (376%, N53.3m to N253.7m in other taxes) and FCT (604%, N2.6bn to N19.4bn in other taxes).
NGF’s Senior Programme Manager (SPM), Mr. Olanrewaju Ajogbasile, in data presentation at a workshop organised by States’ Fiscal Transparency, Accountability and Sustainability Program (SFTAS) for business correspondents in Abuja over the weekend, noted that states had stepped up efforts towards enhanced taxes and IGR collection.
Olanrewaju enumerated factors that influence states’ tax potential and efforts to include structure and size of the economy, including human and natural resources. The amount of revenue collection, which he said would depend on the tax effort of tax administrators – institutional capacity and technology adoption.
“Tax performance can also be influenced by policy decisions in adopting tax laws, tax policy/ regulations, and the level of education of tax collectors, tax morale, and the quality of government institutions (including the level of bureaucracy, skill and corruption). The social contract between the government and its citizens – represented by the quality of public services and the public’s willingness to pay or evade taxes,” he said.
The SFTAS is designed to deepen fiscal transparency at sub-national governments.
National Program Coordinator of SFTAS, Mr. Stephen Okon, also disclosed that states across the federation are to enjoy a $1.5 billion grant through the States’ Fiscal Transparency Accountability and Sustainability, (SFTAS) programme meant to promote fiscal prudence and transparency.
He explained that the $1.5 billion World Bank-Assisted States Fiscal Transparency Accountability and Sustainability (SFTAS) programme seeks to entrench accountability, transparency and maximum utilisation of funds in the citizen’s best interest across the states.
“The World Bank intervention, which is a loan to the Federal Government but a performance based grant to the states entails providing technical support for officials in the 36 states towards successful implementation of the programme,” he said.
He said the first financial assistance package was approved in July 2015 with no conditions attached.
“It included restructuring of existing short-term commercial bank loans into longer-term state bonds, guaranteed by the FGN with 23 states participating and financing facilities from the CBN. As the states’ fiscal situation continued to worsen in 2016, a second package was put in place: The Budget Support Facility (BSF), which supported all states except Lagos.”
As part of the BSF, the 22-point Fiscal Sustainability Plan (FSP) was developed and agreed to by all the states to strengthen fiscal transparency and accountability, state revenue mobilisation, efficiency of state expenditures and sustainability of state debt.
“While progress was made, the implementation of the FSP was uneven and states needed more time to implement reforms, hence the Federal Government asked the World Bank for a loan using the programme for results instrument to support the sustained implementation of the FSP as well as elements of the open government partnership commitments at the state level,” he explained.
