A New Era of Tax Administration in Benue State

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Moses T. Anom

In line with the mandate and vision of the Benue State Governor, Dr. Samuel Ortom to ramp up internal revenues so as to reduce dependency on Abuja allocations, the Chairman of the state’s tax agency, Mimi-Adzape Orubibi has in six months – since assuming office – implemented a series of bold, precise and targeted tax reforms that are fast redefining the structure of tax administration in Benue while remarkably raising prospects for enhanced internal revenue generation.

Now, taxes are levied by states on their citizens and businesses to raise funds for the provision of public works and services. In Nigeria, each state has the potential to fund its budget from its internally generated revenues. Regrettably, Benue, like most states in Nigeria has over the years operated a very broken, lax and ineffective internal revenue generating that contributes less than ten percent to the annual state’s budget. Years of easy oil money from Abuja coupled with a succession of wasteful and visionless leaderships that lacked innovation and creativity did little to deepen and strengthen the state’s tax administration system.

Today, the consequences of the years of waste, lack of planning for the future have come round to haunt the state and the administration of Governor Ortom. With no savings from the golden era of oil prices; burdened by a choking inherited debt profile of over 90billion and with the over 60 percent fall in federal allocation due to falling price of oil that accounts for over 90 percent of its revenues, Benue has found itself in an acutely strained financial situation where it is battling to meet recurrent expenditure, talk less of embarking on developmental projects.

Although the challenges remain and will take some time to clear, Mrs. Mimi Adzape-Orubibi, the elegant and passionate first female boss of the state’s tax agency appears set to transform from potential to reality the capacity of the state’s tax administration system to contribute significantly to the revenue profile of Benue state. She has in her initial actions shown clarity of vision, a good understanding of what needs to be done and daily goes about her work with a passionate commitment to make a difference by reforming and repositioning the state’s tax system as a key alternative source of revenue.

Determined to meet Governor Ortom’s target to raise internally generated revenues from an average of N230 million to N1.5billion, Orubibi has with the active support of the Governor introduced unprecedented tax reforms that have the potential to reset the revenue structure of the state. If sustained and deepened within the next three years of the Ortom-led administration, they would in the very least, balance, if not reverse the lopsided trend that is now in favor of federal allocation.

Some of these reforms include the historic introduction of an electronic payment system to block systemic revenue leakages, boost transparency and accountability to the people.

Under this new system, tax collection agents now use networked Point of Sale (PoS) machines to issue receipts for all taxes collected and all revenue generating points in the state. The payment system is intelligently designed to remotely track – using an embedded sim card that is connected to a telecom network – and record each transaction made on the device. This provision makes it near fool-proof to fraudulent manipulation by unscrupulous tax agents. Since its implementation in some pilot locations like Makurdi, the electronic payment system has helped to substantially close avenues for revenue leakages like cloning of tax receipts and non-declaration of taxes by revenue agents close.

This bold move is very significant to the state’s plans to maintain a tight rein on monies collected and is helping to significantly boost tax collection efforts in Benue. It is estimated by tax experts that the state was losing over seventy percent of collected revenues due to the systemic vulnerabilities of the previous manual system of tax collection.

Commenting on this development, Mr. Tavershima Abutu, a tax consultant familiar with the challenges facing the Benue tax system said, “The new changes that the new Chairman of BIRS is implementing are very good for the Benue state government. They will close most of the loopholes that existed in the system and reduce cases of fraud that were so prevalent. If she is allowed to fully implement and consolidate, people will be surprised at how much she will be able to realize as internally generated revenue”.

Furthermore, Orubibi has widened the tax bracket to include individuals and businesses in the informal sector. Those within this group include traders and market women, cab drivers, Okada Riders, Barber shops and other small businesses.

To lessen the burden of one-time payment for this group of small entrepreneurs’, Orubibi has introduced a convenient, pocket-friendly and innovative daily tax payment plan called ‘Pay Small-Small”. This plan allows tax payers to pay as low as N50/per day in staggered payments over an extended period of time.

The widening of the tax bracket to include the informal sector is very significant because the informal sector – although loose, scattered and not really organized – when put together represents a very huge untapped source of revenues for the government. It is roughly estimated that over seventy percent of taxable individuals and businesses within the informal sector in Benue are currently not captured in the tax net. Before now, majority of revenues came from the formal sector through the Pay As You Earn (PAYE) tax system that is tied to workers’ salaries. The new focus on the informal sector is a good thing because the population of the business community, artisans, traders, small scale businesses within this category far outstrips that of workers.

Relatedly, Orubibi in spite of strong opposition by vested political interests who profit from the disorder, pushed strongly and with the committed political support of Governor Ortom ensured the closure of all revenue accounts previously opened and arbitrarily maintained by Ministries Departments and Agencies (MDAs) in different banks across the state.

Today, Benue state that had a multiplicity of over a hundred accounts with different banks, for the first time in decades maintains a single consolidated revenue account. This makes for better planning, monitoring and gives the Governor, and other relevant government staff a real time snapshot of its revenues. Also, it closes all the systemic loopholes that were exploited by unscrupulous government officials in the past to defraud the government.

Orubibi’s aggressive tax reforms have not gone on unchallenged. There have been protests from sections of the informal sector like the Okada riders and sections of small businesses. And this is understandable. The laxity and corruption associated with past administrations has created a general state of lack of confidence in governance, ignorance and apathy towards paying taxes by citizens. Also Benue state’s economy is a largely driven by the civil service and delays in payment of salaries by Government has led to a general slowdown in economic activities. All these factors coupled with the fact that people generally are wired to resist change are probable reasons for the pockets of protests. However, as citizens get to see the results of the taxes they are paying, the protests and resistance are most likely going to fade away.

With the series of reforms so far recorded by Orubibi, it is fair to say that she has put her best foot forward and no doubt done well. Ironically, many people did not give a long shot at success when the Governor Ortom saw her as a good fit to deliver on his vision for the agency and appointed her in September 2015. This was in spite of her job related academic qualifications which include a B. Sc in Economics from the prestigious Ahmadu Bello University Zaria and an MBA in Finance from Abubakar Tafawa Balewa University, Bauchi in addition to several years of hands-on multi departmental experience at the Federal Inland Revenue Service (FIRS).

Rather than give into the initial apprehensions about her capacity, and experience in leading tax reforms, Orubibi took the criticism in her stride and has stayed focused on meeting her mandate which is to provide the financial cushion for Benue state as it rides the financial storms occasioned by the drastic reduction in federal allocation. Today, it is evident to even her critics that she does not only have the technical expertise and capacity to deliver on her mandate but that she has a workable plan and the right dose of courage and determination to make deep changes to the state’s tax system. She has also proven that she has the boldness to take on vested interest and also possess the political sagacity to successfully navigate the treacherous Benue political waters.

To conclude, though one cannot say that all is done since she has been there for only six months, it is fair from Orubibi’s initial actions that she has taken off on a good note. To those like me, who have kept a close watch at the career of Orubibi and her stellar performance on the new job so far, it has been a confirmation of my confidence in her abilities to deliver on her mandate.

Anom, a Public Analyst based in Makurdi