Economy

N41BN Tax Debt: Indebted States may be forced to pay

Court tells FIRS: You can’t rake VAT on goods consumed in hotels
Written by Maritime First

….As FIRS Chairman highlights what each State owes***

Palpable fears of forceful remittances may have gripped several States Governors, following an address by the Federal Inland Revenue Service (FIRS) Chairman, before the National Economic Council (NEC) highlighting a debt of over N41bn by some States, owed through unremitted Value Added Tax (VAT).

The Jigawa State Governor, Badaru Abubakar revealed while briefing State House Correspondents, shortly after the NEC meeting presided over by the Acting President, Prof. Yemi Osinbajo on Thursday in Abuja, adding that the council was genuinely hopeful, that the indebted states would pay up, timely.

“We had briefing from the chairman of the FIRS and it dwelt on two aspects of tax issues; one is on the Value Added Tax (VAT) that is being collected by states”, he disclosed, noting that there was already an improvement in tax remission from states this year, in comparison with that of last year.

“He (FIRS Chairman) informed the states what their positions are and the outstanding due to the states of about N41billion.

“He believes the states have to pay; he came up also with new technique and system that will help automatic collection of taxes–both VAT and withholding tax; I think the states take and are willing to pay their outstanding.

“This is very important; when we are talking of zero oil, taxes become very important in the future prospects of this country.

“So far, he mentioned that from January to date, about N40 billion was remitted from the states, which has a significant increase compared to the what happened last year,’’ he said.

He said that the governors and the finance commissioners were fully notified on how to boost revenue.

Badaru said that audit was going on in many states on how to reconcile figures between what the states had and what the FIRS had.

According to him, with the initiative, automatically tax will be transmitted to FIRS from the states without delay and without many problems.

The Jigawa state governor said that the second issue discussed was on the capacity of Micro Small and Medium Enterprises (SMEs) to support the economy of the country.

“MSMEs contribution to the Gross Domestic Product (GDP) was discussed and as well as their contributions to exports and tax collection.

“This is all in the view of expanding our tax base and revenue generation towards zero oil economy.

“Challenges such as how the governors have to contribute to make MSMEs more active, responsive and more organised so as to pay their taxes and perform well have been discussed.

“The states promised to support the Federal Government because most of the taxes are also coming into the states.’’

He said that from the statistics made available by the National Bureau of Statistics (NBS), in partnership with Small and Medium Enterprises (SMEs) group, there were about 37 million MSMEs making significant contribution to GDP.

Badaru said that if MSMEs were harnessed, they would help the economy greatly and also boost revenue.

He said that NEC was of the view that organs of government saddled with the disbursement and utiltisation of tax revenue should be transparent and accountable in order to motivate voluntary tax compliance by the MSMEs.

According to him, government at all levels have agreed to provide infrastructure facilities and enabling business environment to allow MSMEs to thrive.

 

About the author

Maritime First