Osinbajo: Most States Can’t Survive without Federal Allocation

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By Ndubuisi Francis in Abuja

The Vice-President (VP), Prof. Yemi Osinbajo, has declared thatmost states of the federation cannot  survive without the monthly allocation from the Federation Account.

Speaking in Abuja Wednesday
at the 20th annual tax conference of the Chartered Institute of Taxation of Nigeria (CITN), Osinbajo said prior to the discovery of oil, many regions in the  country generated adequate revenue through taxes from agricultural produce to the extent that they still contributed money to run the government at the centre.

He said: “Today, the states in the whole Western Region, apart from Lagos do not even earn enough in taxes to pay salaries let alone do any major project.

“Without federal allocation, most states cannot survive. Lagos State alone takes as much IGR as 31 states combined. This tells you how little the other states generate in IGR.”

Lamenting the low level of tax payment among Nigerians, he regretted that at six per cent, Nigeria has one of the lowest tax-to- GDP ratio in the world.

According to him, as at May 2017, only 14 million of the country’s 70 million economically-active citizens paid taxes to the government.

Osinbajo noted that through deliberate strategies to ensure voluntary tax compliance, the Federal Inland Revenue Service (FIRS) had been able to raise the population of taxpayers from 14 million in May last year to 19 million currently.

Out of the total taxpayers in the country, the vice-president added that only 943 of them paid self assessment taxes of N10 million and above, adding that of the 943 taxpayers who paid N10 million and above, 941 of them reside in Lagos while the remaining two are resident in Ogun State.

Osinbajo noted that when people pay their taxes, they tend to hold government more accountable on how the country’s resources are being managed.

He argued that the mismanagement of funds thrived in the past because oil revenue was readily available thereby reducing the need for people to pay taxes.

The current administration, Osinbajo added, had put in place measures to check the mismanagement of government resources, noting that through the implementation of the Treasury Single Account (TSA), about N4 billion monthly bank charges was being saved by the government.

In addition, he said the audit of government payroll through the Presidential Initiative on Continuous Audit had saved the government over N200 billion personal costs.

According to him, the amount would have been paid to ghost workers if the government had not sanitised its payroll.

“When people pay taxes, they are more inclined to hold government accountable and they tend to be less passive in governance,” he added.

The CITN conference, which is the single largest gathering of tax practitioners in the country, has as its theme: “Institutionalising tax paying culture in a developing economy.”

In his speech at the event, which was declared open by Osinbajo, the CITN President, Dr. Cyril Ikemefuna, said that the conference was vital in view of the efforts of the government to boost tax revenue.

He said during the conference, tax practitioners would review the implementation of the Economic Recovery and Growth Plan (ERGP) Voluntary Assets and Income Declaration Scheme (VAIDS), transfer pricing, and arbitrary tax incentives as a disincentive in a tax system, among others.

He stated: “The heartbeat of any economy is its deft use of taxation for promoting economic growth and development.

“Through taxation, government ensures that resources are channelled towards important and critical activities in the society.

“Thus the imposition of taxes is essential to economic and social development in any given economy.”