The overall cost of revenue collection by key revenue-generating agencies of the Federal Government rose by N108.98bn between 2019 and 2021.
Specifically, data from the National Bureau of Statistics revealed that the Nigerian Customs Service, Federal Inland Revenue Service, and Department of Petroleum Resources received an aggregate of N220.39bn as cost of collections in 2019.
However, according to the latest reports released by the NBS on monthly Federal Account Allocation Committee Disbursements, the cost of collections by these revenue-generating agencies rose to N329.37bn in 2021.
The difference in the collection cost recorded within the three-year period indicates a 49.4 per cent increase. In 2021, FIRS’ collection cost stood at N145.89bn, up by 42.58 per cent from N102.32bn recorded in 2019.
The NCS recorded N100.03bn in 2021, representing a 58.15 per cent increase when compared to N63.25bn it received in 2019. DPR recorded N83.45bn in 2021, rising by 52.25 percent from N54.82bn recorded in 2019.
Similarly, the revenue received by these agencies as cost of collection in 2021 was 43.9 per cent higher than the N228.77bn recorded in 2020. A closer look at the cost of collection in 2020 showed that FIRS received the sum of N111.97bn, NCS received N70.67bn while DPR recorded N46.19bn as costs of collection.
The FIRS is statutorily entitled to retain seven per cent of the revenue they generate as cost of revenue collection, while the NCS and the DPR are both entitled to four per cent, respectively.
According to the Section 15 (a) of the FIRS (establishment) Act, the major source of funding for the agency is “a percentage as determined by the National Assembly of all non-oil and gas revenue collected by the service which may be appropriated by the National Assembly for the capital and recurrent expenditures of the Service.”
Former President Goodluck Jonathan had in October 2014, approved the retention of four per cent cost of collection by the DPR and this has remained unchanged.
Going by the statutory entitlement of the revenue agencies, the rise in the aggregate cost of collections recorded in 2021 could be attributed to the increase in revenue generated by the agencies during the period under review.
Early this year, the Special Assistant on Media and Communication to the Chairman of FIRS, Oluwatobi Wojuola, said FIRS collected N6.4tn as revenue in 2021.
This represented 30.6 per cent increase when compared to N4.95tn generated in 2020 and a 28 per cent rise when compared to N5tn generated in 2019.
In September 2021, the Director of DPR, Sarki Auwalu, disclosed that the department had generated 70 per cent of its N3.2tn (N2.24trn) revenue target for 2021. The revenue generated in 2021 was higher by 60 per cent when compared to N2tn generated as at the end of 2020, The 2021 figure is also 33 per cent higher than the N2tn generated in 2019.
Last year, the Deputy National Public Relations Officer of NCS, Timi Bomadin, at a stakeholders and media engagement forum in Lagos said the NCS generated N2.3tn revenue in 2021, exceeding the N1.67tn revenue target for 2021.
The 2021 figure rose by 40.2 per cent from N1.6tn generated in 2020 and by 76 per cent when compared to N1.34tn recorded in 2019.
However, the cost of revenue collection may decline in 2022 following the government’s proposed legislative framework to strip the NCS of its revenue collection function.
The Federal Government through the Minister of Finance, Budget and National Planning, Zainab Ahmed, said the sole responsibility of collecting revenue should be domiciled within the FIRS while NCS facilitates trade.
The Minister said this at a one-day public hearing on a bill for an Act to repeal the Customs and Excise Management Act (2004) and the Nigeria Customs Service (establishment) Bill organised by the House Committee on Customs, held in December 2021.
Amplifying his boss’s statement, at the public hearing, the Permanent Secretary of the Ministry, Aliyu Ahmed, said there was a need to unify revenue collection so that the Customs can concentrate on its responsibility of trade facilitation.
He said, “The single most important function of the Customs service anywhere in the world is trade facilitation. But in the introduction of the Chairman, I hear him talk about revenue, collection of revenue. This is the secondary service of the Customs all over the world.
“Revenue collection by Customs is a distraction. The reason is that the main function of the Nigeria Customs Service is trade facilitation. But the trade facilitation has been pushed to the background because of the focus on revenue collection.
“In other climes, the best practice is moving towards unifying revenue collection. If we want to go that far, and achieve that best practice, our submission would be to move revenue to the Federal Inland Revenue Service so that Customs Service can really focus on trade facilitation function.”
