Calibrating ALGE Model Using Thermal Data

Tax authorities in Nigeria are all parastatals of government. The Federal Inland Revenue Service and State Board of Internal Revenue (SBIR) or the State Internal Revenue Service (SIRS) were not self-accounting. They relied on the budgets of their supervising ministries for logistics and all costs. Consequently, all emergency expenditure required for tax collection must of necessity be channelled to the supervising ministry if it was not initially contained in the budget. The controversy of going cap in hand to beg for money has been cured by the long awaited autonomy which was granted to the Federal Inland Revenue Service and it now maintains a corporate status.⁴⁸³ Section 1 of the Federal Inland Revenue Service (establishment) Act provides:

482I O Okauru (ed) FIRS Handbook on Reforms in the Tax System (2004 – 2011) Ibadan, Safari Books Ltd, 2012, p. 49.

483 Federal Inland Revenue Service (Establishment) Act, 2007, S. 1(1), (2) & (3).

163 (1) There is established a body to be known as the Federal Inland

Revenue Service (in this Act referred to as “the service).

(2) The service –

(a) shall be a body corporate with perpetual succession and a common seal;

(b) may sue or be sued in its corporate name and;

(c) may acquire, hold or dispose of any property, movable or immovable for the purpose of carrying out any of its functions under this Act.

(3) The service shall have such powers and duties as are conferred on this Act or by any other enactment or law on such matters on which the National Assembly has power to make law.

The State Board of Internal Revenue have also acquired the same status.⁴⁸⁴ Accordingly, laws⁴⁸⁵ enacted in consonance with the provisions of this Act, provided the autonomy in line with the provisions of the Act. The section 87 of the Personal Income Tax (Amendment) Act provides thus:

There is hereby established for each state, a board to be known as the State Board of Internal Revenue (in this Act referred to as the

“State Board”) whose operational arm shall be known as the State Internal Revenue Service (in this Act referred to as “the State Service”).

It is in compliance with the above provisions that states enacted revenue laws creating the body to manage and superintend the collection of the various taxes in a state. An example,

484 Personal Income Tax (Amendment) Act, 2011 S. 87.

485Anambra State Revenue Administration Law, 2010, S. 3 as an example.

164 is the enactment of Anambra State Revenue Administration Law 2010. Section 3 of the law provides:

(1) There is established a Board to be known as the Anambra State Board of Internal Revenue (referred to in this law as

“the Board”) whose operational arm shall be known as the Anambra State Internal Revenue Service (referred to in this law as “the State Internal Revenue Service”).

(2) The Board;

(a) shall be a body corporate with perpetual succession and common seal.

(b) may sue or be sued in its own name; and

(c) may acquire, hold and dispose of any property or interest in property, movable or immovable for the purpose of carrying out its functions under this law.

(3) The Board shall have such power and duties as are conferred on it by this law or by any other law.

In section 88(1) of the Personal Income Tax Act, it provides that the State Board shall be responsible for doing all such things as may be deemed necessary and expedient for the assessment and collection of the tax and shall account for all amounts so collected in a manner to be prescribed by the commissioner. In order to consolidate the autonomy granted to the outfit, the Act⁴⁸⁶ provides:

Provided that an amount of not less than 5 percent of revenue collected as may be approved by a State House of Assembly shall

486 Personal Income Tax (Amendment) Act the proviso to section 88(1)(b).

165 be retained by the State Board of Internal Revenue to defray cost

of collection and administration.

Section 15(a) of Anambra State Revenue Administration Law, 2010 provides that an amount not less than 2.5% and not more than 10% of all revenue collected by the State Internal Revenue Service in the preceding year as may be appropriated by the State House of Assembly as administrative charge or cost of collection. The provisions above stipulates that the FIRS can now defend their budget at the National Assembly and State Boards can now defend their budgets at the State Houses of Assembly. The percentage of the realized tax revenue for administrative financing allowed to be kept by the Board. This has removed the problem of lack of administrative finance. It would also encourage the tax authorities to realise substantial tax so that they can retain their statutory share for efficient administration.

Despite this autonomy, there is still the supervising authority to these agencies, that is, Minister of Finance and Commissioner for Finance of the States. Their interference follows the reasoning that the legislature being too much pressured by time cannot consider all the details of the legislation, that the legislation may be too technical for effective handling on the floor of the National Assembly. It is sometimes argued that a matter like tax issues may require some measure of flexibility so as to take care of future contingencies and unforeseen supervening developments in the execution of government policy.⁴⁸⁷The problem is where to draw the line and where the principles are undistinguishable from the details. The then Minister of Finance pursuant to the provisions of section 38(a) of the Value Added Tax Act of 1993 in a gazette gave notice of increase in the Value Added Tax rate from 5% to 10% and other new tax related regulations. The provisions of section 38(a) states that the minister may by order published in a gazette amend the rate of tax chargeable. It goes further to state in

487M T Abdulrazaq, “An Examination of the Powers of the Minister of Finance to increase the tax rate under the Value Added Tax (Amendment) Act of 2007” in J A Agbonika (ed) Topical Issues on Nigerian Tax Laws and Related Areas op. cit p. 1.

166 section 38(b), amend, vary or modify the list set out in the first schedule to this Act. This provision did not in any way or by any means empower the Minister of Finance to amend the rate of tax from 5% as stated by virtue of the Decree No. 31 of 1996.

Another area of concern about the political interference is on indiscriminate grant of Tax Holidays and incentives. Nigeria is one of the few countries in the world where it is fashionable to evade taxes and one factor that is largely responsible for this is the lack of coordination among relevant ministries, agencies and departments. Osemene commenting on tax waivers and exemptions disclosures by the Minister that about 30 percent of those that received tax waivers from government, especially under the pioneer status scheme now abuse the system, said:

Instead of encouraging tourism, agriculture and other sectors to boost Foreign Direct Investment (FDI), focus has rather been on granting indiscriminate incentives and tax holidays to foreign investors.⁴⁸⁸

Nigeria economy will not grow where the business operators who are the major contributors are groaning and tax issues are left in the hands of politicians to use as a tool for overburdening the people or use it in pacifying their kit and kins.

4.9 Delegating Tax Administration and Collection to Tax Consultants and Agents