Chief Mark Dike, erstwhile President of Chartered Institute of Taxation of Nigeria (CITN) also served as Secretary of the Dr. Dotun Philips-led Study Group on National Tax Policy Reforms set up some years ago to review the nation's tax system. In this interview with Ibrahim Apekhade Yusuf, he speaks on the merits of the proposed merger of the Federal Inland Revenue Service (FIRS) with the Nigeria Customs Service (NCS). Excerpts:
You were a member of the Study Group that recommended tax reforms some years ago. Can you reflect on the role played by that group?
Yes l served as secretary to the Dr. Dotun Philips-led Study Group some years ago and part of our terms of reference at the time was among other things to review the tax policy with a view to providing useful suggestions to the Federal Government on the appropriate measures and policy direction to follow in order to put in place a tax policy that is all encompassing for the country. And I can say with all sense of responsibility that since the onset of the current tax reforms arising from the Dotun Philips Study Group report, the Nigerian tax system has actually repositioned itself with an improved revenue yield.
The Study Group did produced a policy report at the end of the day which has formed the basis of further reforms in the nation's tax ecosystem till date.
You are aware that a committee empaneled by the Minister of Finance recently recommended that the Federal Inland Revenue Service (FIRS) be merged with the Nigeria Customs Service (NCS). Do you share similar sentiments?
Of course, this also formed part of our recommendations at the time we did our report. It's not a misnomer at all.
Most countries of the world have since merged the revenue collecting desk of the Customs with the revenue agencies.
And we have good examples both within the sub-region and other advanced economies.
Within the continent of Africa, l know for a fact that in South Africa, Kenya, Uganda, Rwanda, Ghana, they've since merged the revenue collecting arm of customs with the revenue organ of the state.
In more advanced countries like the UK and Canada, it's the same thing. So I strongly support that it should be merged with the FIRS to ensure efficiency in tax collection and revenue generation as the case may be.
But the fears being expressed in some quarters is that it may not go well.
As l said, the Nigeria Customs Service is a paramilitary agency with clear cut functions over security and safety of the borders among others. That side of customs cannot be merged with the FIRS, okay. The only aspect being proposed for merger is the revenue collecting desk of customs. The border services and security functions of the Customs still remains. It's as simple as that.So all those arguing against the merger are ignorant of the procedures and processes of revenue collection.
As we speak, we know for a fact that the Customs is still having a lot of leakages in the system in terms of tracking and monitoring revenue generation. We have seen so much leakages in the system. We've seen situations where the right duties are not paid on most of the goods that are coming in through the ports.
A lot of VAT are not captured as a result thus leading to revenue loss. We have seen cases of overinviocing of goods that comes to African coast because the tariffs hardly corresponds with the value of goods being declared most times.
One thing that is sure is that this merger will help to bring about a synergy of cooperation with both organs of government.
Of course, data gathering will be more efficient and there will be enhancement in terms of administration of taxes.
Tax revenues depend on government's administrative capacity to collect taxes and taxpayers' willingness to comply. Compliance with tax laws is important to keep the system working for all and to support the programmes and services that improve lives. Keeping the rules concise, simple and as clear as possible will be helpful to taxpayers.
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