A report by Agora Policy, an Abuja-based think tank has revealed that agencies of government such as the Nigeria Customs Service (NCS), Federal Inland Revenue Service (FIRS) and Nigerian Upstream Petroleum Regulatory Commission (NUPRC), got more revenue from the Federal Account Allocation Committee (FAAC) than 23 states in the month of January.
The states are in the four geopolitical zones of North-east, North-east, North-central and South-east.
The FIRS receives four per cent of non-oil revenues; the NUPRC gets four per cent of royalties, rents and other revenues from the oil and gas sector; and the NCS gets seven per cent of customs duties and levies.
Agora, in a policy note titled ‘Why Nigeria’s Cost-of-Collection Approach is no Longer Tenable,’ said the idea of centrally collecting taxes and revenues remains sound as it allows for
ease and efficiency of collection and administration.
“…the gross allocations to the six geo-political zones for the same month were as follows: N56.60bn for the north-east; N55.58bn for the north-central; N76.09bn for the north-west; N47.75bn for the south-east; N141.85bn for the south-south; and N86.60bn for the south-west.
“This shows that for the month, the cost of collection received by the three agencies (N78.30bn) was higher than the gross FAAC allocations to each of four geo-political zones in the country: north east, north-central, north-west and south-east.
“The south-south and south-west got more than what the three agencies received only on account of 13 percent derivation for the oil producing states and the allocation of N21.28bn as the net allocation to Lagos State for value-added tax (VAT),” it stated.
It, however, said the idea of turning federal agencies into commission agents of the Federation is riddled with all sorts of problems.
The group, further, noted that the cost-of-collection approach to rewarding and funding such agencies might have served a useful purpose at some point but recent developments show that it is a flawed idea that enables abuse, distortions, distractions and wasteful expenditures.
“The utility of the approach has been overtaken. It is thus no longer tenable,” it added.
