There are strong indications that if the states in the country win the war against the Federal Inland Revenue (FIRS) on Valued Added Tax (VAT) collection, it will have adverse effects on the operations of the revenue agency.
Reports say some employees of the FIRS are currently in panic mode over the recent moves by states to begin collection of VAT which is hitherto being the exclusivity of the agency for its principal, the Federal Government of Nigeria.
Three members of the FIRS workers’ union informed Sunday Punch that stripping the FIRS of the power to collect VAT could reduce the commission the agency would have received by as much as N96bn.
The FIRS had stated in a document submitted to the National Assembly that it projected it would be able to collect N2.44tn from both import and non-import VAT in 2022.
The FIRS, which takes four per cent of the amount collected as VAT as its commission, projected it would receive N96bn in 2022.
Should the states begin collecting VAT, the FIRS would lose this huge sum, a top source within the tax body was quoted to have said in an interview.
The source said, “Our highest source of revenue is Petroleum Tax and VAT. Others include Stamp Duty, Company Tax and a few others. VAT is number two for us and we are paid bonuses based on performance.
“If we stop collecting VAT, the FIRS will not be able to pay bonuses and other special packages to staff. As it is, many of us are scared because we don’t know what will happen next.”
Another senior employee revealed how the FIRS had hired too many staff members leading to its wage bill being high. He said the service might be forced to reduce its workers once VAT payment was taken away.
Another employee said, “One big problem we have in the FIRS is that almost every big politician has a relative in this agency due to the system of patronage we run in this country, whereby political office holders are given slots. The implication is that we have too many workers and our wage bill and overhead cost are high. We will be lucky if some of us are not sacked.”
Out of the FIRS’ N216.65bn budget for the 2021 fiscal year, the sum of N107.52bn is for personnel cost; N47.22bn for overhead cost; and N61.9bn for capital cost.
As of 2019, the FIRS had about 9,000 staff members but the figure is believed to have increased since then.
The agency has been criticised for frivolous expenses such as setting aside N160m to sew uniforms for 850 drivers and budgeting N825m for refreshment and security vote of N250m, among others in 2019.