Nigeria 2019 | ECONOMY | INTERVIEW

As Nigerians start to see the benefits of tax revenues, they have begun to appreciate it more.

Babatunde Fowler
Babatunde Fowler holds a BSc in economics from the University of Wisconsin–Whitewater. He completed another bachelor’s and an MBA at California State University. He started out as a marketing intern with Avon Products Inc. in New York and was later transferred to Johnson & Johnson Nigeria. He then moved to banking by joining Commercial Bank (Credit Lyonnais Nigeria Limited) and later Chartered Bank as Senior Manager. In 2005, Fowler was appointed pioneer Permanent Secretary/Executive Chairman of the Lagos State Board of Internal Revenue. He was appointed Executive Chairman of FIRS in 2015. He is currently Chairman of the Joint Tax Board, Chairman of the African Tax Administration Forum, and First Vice Chairman of UN International Committee of Tax Experts.

The federal government managed to increase tax revenue by 42% in 1H2018. To what do you attribute this success?

This success is the result of certain measures. First, we implemented changes within our staff, ensuring we had the right people in the right positions. Second, we increased our level of education for both tax administrators and taxpayers. Finally, we deployed technology that makes filing taxes more convenient and transparent for taxpayers. FIRS signed an MoU with the state revenue boards so that we are able to exchange taxpayer information. We added 800,000 new corporate taxpayers in 2016. Due to these efforts, FIRS and states had over 19 million taxpayers nationwide in 2018. We focused on technology and have made it extremely easy for any corporate organization to pay taxes, download receipts, and go through the refund process. Therefore, taxpayers are willing to pay without worrying about making a mistake, which would mean not getting their credit back. On top of that, we have effective monitoring to regulate compliance. Taxpayers realize that they will not be left alone; even if we are not knocking on their doors in six months, we will be knocking in 12 months. The tax administrations at both state and federal levels have changed, and they are starting to see this. To date, no Nigerian has ever been sent to jail for tax evasion. However, now there are consequences, and the Economic and Financial Crimes Commission (EFCC) can question people or meet them to discuss their situation. We may have been lenient, but now we are bringing the consequences to light.

How hard is it for you to raise awareness about the importance of paying taxes and its benefits?

We are engaging with our primary stakeholders. For the first time, FIRS has reached out to meet all its stakeholders in hospitality, entertainment, business, and politics. Members of the House of Representatives, the parliament, are sitting with us to discuss their current year's budget and strategies to improve the revenue drive. They give us ideas based on our limitations; we are bringing every stakeholder into the picture so they can see the benefits of working together.

Which sectors seem the most promising for increasing tax revenue?

In terms of the number of taxpayers, we are looking to add more SMEs. They currently contribute less than 5%, and if you look at their contribution to GDP, they should be contributing nothing less than 35% of total tax revenue. We have met with them and engaged with them, while taking other measures based on information that we have to ensure that none of them are left out of the tax net, whether they run an enterprise, a small business, or a limited-liability company.

What is your vision for achieving these goals in Nigeria?

If we continue at the same pace, we can achieve 20% of the tax mix comprised of revenue from SMEs by 2019. The government fully supports us. Some projects may take a year or more to develop, but citizens' confidence in the tax system will grow when they see work in progress.

What is your outlook for 2019?

Just like some of the other oil-rich countries, we never imagined taxation would be the main source of revenue. Oil is a resource whose price is determined by more developed countries, and as a result, we are disadvantaged. There is a 2026 agenda for African countries to be able to fund their budgets internally without grants or aid. It is something we can do right now. Nigeria can show the rest of the world that it can transform within a short time and fund its own budget with taxation as a primary source of revenue.