New tax regime imminent in Abia as govt. moves to shore up revenue

Posted by Boniface Okoro, Umuahia | 27 November 2012 | 5,116 times

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Abia State Government has put in place a new fiscal policy that would boost the state’s Internally Generated Revenue (IGR).

IGR, as the name implies, is revenue realised from state-wide internal financial sources and resources, different from the commonly known central disbursement purse – the Federation Account.

The design to achieve this improved financial base is clearly enunciated in the 2013 Appropriation Bill now lying before the state House of Assembly.

Presenting the 2013 budget estimates to the lawmakers, Governor Theodore Orji said his administration hopes to rake in about N35 billion from IGR next year. The amount represents about 31 per cent of the estimates for the state’s services in the next fiscal year.

Announcing the revenue estimates, the governor said: “For the 2013 fiscal year our Internally Generated Revenue (IGR) is estimated at   N34,940,133,420. This represents an increase of 57.37 per cent over the 2012 Internally Generated Revenue. This figure is 26.05 per cent of the total budget outlay of N134,148,037,590 and 30.94 per cent of total projected revenue of N112,943,586,870.” The IGR estimate for last year was about N6 billion.

It is one thing to make a proposal and another to realise it. But the governor was optimistic that adequate measures have been put in place to realise the 2013 IGR.

“We have adopted the strategy of Direct Bank Lodgement of Electronic Collection System through the banks to capture and confirm all payments made to the state, there are  other control measures in the area of  Assessment, Collection, and Accounting of all tax revenues,” Orrji told the lawmakers.

He further explained that to improve Abia’s IGR, his administration has also resolved to widen the state’s revenue base to enable the state to reduce her dependence on statutory allocation from Federation Accounts Allocation Committee (FAAC). From the foregoing, Abians should prepare for a new tax regime next year.

From the inception of his second term, the governor has consistently harped on the need for an improved IGR to drive infrastructural development of the state.

This is made more cogent based on the stark reality that over 75 per cent revenue accruing to the state is deployed to servicing current expenditure.

During the 2012 May Day, the governor told workers that the state receives between N3.2 billion and N3.5 billion monthly from FAAC. According to him, about N2.8 billion is committed to workers’ salaries and the remainder is dedicated to other areas of need, including projects implementation.

For the governor, the increase in Abia’s IGR profile is in arithmetical progression while the legions of financial responsibilities staring government in the face are growing geometrical progression. The answer to raising funds to tackle these myriads of problems which funds from the federation account could hardly take care of remains a critical inward assessment.

Performance is the yardstick for characterisation of any government. This, the governor is aware of. Performance itself, is greased by availability of funds, oiled by meticulous planning and driven by effective and efficient execution.

To shore up the state’s revenue, the governor maintained that improving the IGR was the answer. Abia’s current monthly IGR stands at a paltry N450 million monthly.

Thus, evolution of an IGR-spinning formula has become imperative and imminent, prodding government into its current frantic search for a good, scientific magic wand for boosting her accruals from IGR.

It is in this light that the state embarked on streamlining its revenue collection mechanisms. First, it disengaged revenue consultants and contractors, disbanded all revenue collecting taskforces and ordered Ministries, Departments and Agencies (MDAs) to stop receiving revenue payments through their various revenue offices. Government, rather, created consolidated revenue account in different banks where all IGR accruals should be paid into henceforth.

That was why the authorities banned payment of any form of revenue to MDAs, revenue contractors and individuals with the caveat that those who do so would be doing it at their own risk. Thus, from the middle of this year, it became illegal to pay any form of revenue to any group in the affected categories.

For effect, the state has bought about 50 patrol vans solely dedicated to IGR drive across the state as a way of mobilising those manning revenue departments and agencies. The beneficiaries included revenue-generating MDAs as well as the 17 local government areas and the Board of Internal Revenue (BIR).

To address issues of non-compliance by the public, the government rejuvenated the revenue courts where offenders would face summary trials.

Attorney-General of the state, Chief Umeh Kalu, remarked that “with this inauguration, the revenue courts will help the state government shore up its revenue.”

Kalu added: “If nothing is done to improve the IGR, it will be difficult to pay salaries in the next three – four months. So much money is being realised in this state but it ends up in private pockets. There are lots of fake government receipts in circulation.”

Jonathan Agbai Kalu, interim chairman, Physical Planning and Infrastructural Development Fund (PPIDF), explained that the decision to set up the revenue courts was warranted by an unusual situation. The PPFID itself has been reorganised and repositioned for better performance. The exercise enthroned Chief Jonathan Agbai Kalu, a retired Permanent Secretary, as the new helmsman of the agency which, if properly run, could rake in more than N10 billion annually.

Gearing up for a result-oriented system and smooth implementation of the new revenue policy, the governor held meetings with major stakeholders in the civil service. They are Commissioners, Permanent Secretaries of revenue-generating MDAs and Auditors of the 17 local governments.

At those meetings, the governor appealed to their conscience to do away with the ugly system of defrauding government and ensure that government revenue was properly remitted.

Orji told them that anyone caught diverting government revenue would go in for it. In fact, the governor told newsmen on hie return from his annual vacation in September that he would not hesitate to remove any one who proves to be a stumbling block to his efforts to raise the IGR bar of the state.

Abia State Environmental Protection Agency (ASEPA), one of huge revenue generators for government, has been equipped for better service delivery as government has greatly assisted it with logistics. The governor has purchased about 20 new trucks. This has enhanced refuse disposal efficiency of the agency.

The agency has commenced house-to-house refuse collection in some major streets of the Umuahia capital city. This will motivate people to honour their financial obligation by way of paying for the services they enjoy.

To expand the field for generation of more revenue, government embarked on construction of new markets. They are the Ubani Ibeku Ultra-modern International Market which will be ready early next year and the Azueke Ibeku Industrial Market already completed and now in use. These markets, in addition to Ariaria International Market and many others located also in Aba, are revenue spinners. What is required is honest collection and remittance of revenues from these sources. For now, touts and impersonators are having field days, feasting and feeding fat on government money which should be deployed for public good. “You will be amazed if I tell the amount of revenue that we make from Aba monthly,” Governor Orji said in an interview. 

Also, when completed, the International conference Centre, which certainly would be commercialised, will be another IGR spinner for government

The rebranded Board of Internal Revenue (BIR) which serves as the linchpin of the new revenue policy and beneficiary of 14 of the patrol vans has embarked on the census of Abia civil servants through the issuance of Taxi Identity Pin Numbers (TIN) It is hoped the exercise will generate a data base of all taxable adults in Abia for correct estimates and projections.

Some other giant steps taken to make Abia’s revenue profile the envy of all include the evacuation of power from the Ohiya 132 KVA power injection station, resuscitation of the moribund NNPC depot at Osisioma and privatisation of state-owned cashew, palm and rubber plantations.

For instance, the Ohiya power station has enhanced stable power supply to many parts of the state, thus becoming a catalyst for stimulating economic activities. Apart from impacting positively on manufacturing concerns, it has stimulated small-scale businesses. These ventures boost government revenue through payment of many forms of revenues such as operational permit, ASEPA levy, Infrastructural levies etc.

To cap it all, the state has continued to invest heavily in security to ensure sustenance of the peace and security being currently enjoyed in the state. Security is nectar to investors and creates conducive environment for existing businesses to thrive.

To succeed in this mission, government should stamp its authority against the use of agents by the MDAs. Despite government pronouncement on paying all revenue into the banks, some agencies, including PPFID and ASEPA, are still using agents to collect revenues.

Also, serious measures must be taken to plug all loopholes that encourage siphoning of government revenue by the civil servants while genuine consultants should be contracted for the markets. Investigations have revealed that most of those contracted by government to collect revenue from the various markets care more for their pockets and so, are given to under declaring proceeds from their areas of jurisdiction.

There should a reorientation of the people to prepare them for the increased taxes and levies they would pay next year. It is on record that many comply with government directives on revenue but their pay find their way into the wrong hands. Majority would pay with cheers if there is practical proof that the money they part with was being judiciously utilised to affect their lives positively.

The case of Lagos and Rivers states are good examples. Both states have taken steps to increase their IGR profiles. The consequence has been a massive increase in delivery of democracy dividends to their people.

A state can assume to have arrived only when its IGR could finance its Capital projects. This is the dream of the administration of Governor T.A. Orji which should be supported by all well-meaning Abians.

•Photo: Governor T.A. Orji.

Source: News Express

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