Kwara’s dwindling revenue and options before it
AMIDST dwindling revenue from the Federation Account and the consequences to the State, Kwara State Government is re-strategising with a view to shore-up its revenue especially the internally generated revenue (IGR) as well as depend less on the federal allocation.
This became imperative when the stark reality was that the state’s monthly wage bill alone, aside other expenditures, was higher than the revenue accruing to it monthly. The monthly federal allocation that accrues to Kwara has reduced to 1.4 billion naira from 2.2 billion naira, while the monthly wage bill of the State is said to be fluctuating between 2.7 billion naira and 2.8 billion naira.
Besides, it is claimed that Kwara records a leakage of about five billion naira annually. This was allegedly discovered recently following the constitution of a Debt Review Committee by the State government. The Senior Special Assistant on Media and Communications to the Governor, Dr. Muyideen Akorede who disclosed this in Ilorin, said that the five billion naira leakage was discovered after the governor directed a ‘desk review’ of the state revenues. “This is just a desk review and if a desk review can reveal N5 billion, imagine how much leakage is actually going on,” he added.
Given his knowledge of the economic status of the 48 year old state particularly with his experience as Commissioner for Finance for seven years before emerging as the incumbent Governor, Abdulfatah Ahmed brought the experience to bear when in June this year, he signed into law the bill establishing the Kwara State Internal Revenue Service (KWIRS). The law empowers the agency to collect and manage revenue on behalf of the State government and its local councils.
But despite the development, the state still ranked among those owing their workers’ salaries running into about three months in arrears. The Governor noted that the development among others would tackle the current financial crunch rocking Kwara and tackle challenges faced by the state in meeting its obligations to the people, just as it would also reduce dependence on federal allocations, which have suffered drastic reductions following the sustained fall in crude oil prices in the global market.
Thus inspired by the successes recorded by the Lagos State Internal Revenue Service (LIRS) and its neighbouring Ogun State Internal Revenue Service (OIRS), the Kwara State government recently invited the representatives of both agencies to share their experiences in revenue collection and management with the officials of KWIRS.
At the meeting, the officials of LIRS and OIRS shared the scope of their operations with their KWIRS counterparts. They also talked about what they have been doing right that has helped revenue collection and tax administration in their respective states. KWIRS is expected to adopt e-payment for revenue collection as no cash payment will be allowed.
With the mandate to expand the IGR base of Kwara State, KWIRS has been given a target by the state government to generate around two billion naira for the State every month, as against the monthly average of 700 million naira the State currently generates.
Asides its primary function of collection and management of revenue, the agency is expected to promote policies and actions that will check and block all revenue leakages, as it will carry out constant checks on the finances of the various ministries, departments and agencies in the State.
Already, the new development has since generated growing concerns among the people of the State, with many expressing worry that the new move by their government was aimed at increasing taxes on individuals and businesses in the state.
The governor has however, allayed fears of the agency imposing stealth taxes on individuals and businesses, stressing that it was primarily set up to ensure efficiency in revenue collection and management.
“The KSIRS will not impose fresh taxes on individuals and businesses in the state. The agency is only authorized to assess and enforce payment of due taxes, levies, fees and charges in the state. KWIRS will make revenue collection and management more efficient,” Ahmed noted.
However, given the reality of the present day where the country’s financial earnings from the sales of crude oil has depleted due to a sustained decline in world oil price, expanding the Internally Generated Revenue (IGR) base of a state is one big deal that must be taken seriously to ensure the proper and effective running of the state. It is paramount for states to generate more funds to execute more projects.
Since the constitution of KWIRS, Ahmed has been meeting with various stakeholders in the state to solicit their collaboration and support for the state renewed IGR drive. The first set of people he met were the chairmen of local government councils in the State. There are 16 councils in Kwara, and the largest of these councils generates N200, 000 as its monthly revenue. Instructively, the governor charged the council chairmen on
the need for them to increase revenue generation in their respective councils.
Ahmed also met with the Directors of Finance and Supplies (DFS) who are the controllers of finance in their respective ministries within the State. At the meeting, the Governor told them to brace up for the new challenges and work together with the state revenue agency in meeting its targets of jacking up the state’s revenue. He underscored the importance of civil servants who are about 20, 000, to key-into the new scheme of tax administration in the State.
Besides, the Governor met with the heads and bursars of the state’s owned tertiary institutions, considered to be potentially huge revenue generating agencies. While disclosing that no form of blackmail and misinformation would deter his administration from implementing measures that would galvanise the state’s IGR, Ahmed urged the authorities of the institutions to support the State government’s drive in expanding its revenue base.
He noted that with improved IGR, the state government would be able to properly meet its obligations to the people, put food on their table, and make Kwara a better place to live and invest in.
Consequently, he directed all the 9 state’s owned tertiary institutions to open a single revenue account for fees and other payments in a pilot exercise that has been extended to all revenue generating agencies in the state. They were also instructed to close all other revenue accounts maintained in commercial banks across the state. It
is believed that this would enable the government to monitor the management of the institutions’ finances.
Ahmed assured that the institutions would continue to receive budgeted funds from the state government at the appropriate time and that the government only desire was to ensure efficiency in revenue generation and management, stressing that the State can only survive the current economic crisis in the country through an enhanced internally generated revenue system.
He added that Heads of tertiary institutions in the state have an opportunity to demonstrate their managerial skills as they migrate from inefficiency in revenue generation to levels of sufficiency, adding that all ministries, departments and agencies have been barred from opening bank accounts or obtaining bank loans without authorization from the office of the Accountant-General. Ahmed called on banks
to key into the government’s new revenue drive and avoid any actions capable of contravening the new revenue law, saying the government will not hesitate to review its relationship with any commercial bank that sabotages the law.
While commenting on the single revenue account for state’s owned institutions, the Senior Special Assistant on Media and Communications to the Governor stated that it has been a success, and commended the institutions for their cooperation so far.
In the same vein, during the presentation of Staff of Office to the Oloota of Odo-Owa, Oba Joshua Oluwatoba Adeyemi in Odo-Owo, Oke-Ero local government area of the State, Ahmed described traditional rulers as symbols of an institution that once thrived on taxation, and urged them to help in mobilizing their people in fulfilling their civil obligation of paying taxes. The governor noted that it was important that key stakeholders like the traditional institution assisted the state revenue generating agency in ensuring that the people of the State comply with the increased revenue generation drive by paying taxes.
On the need for effective tax education and public enlightenment, Akorede hinted that different platforms such as drama, social media campaigns, radio jingles, billboards and the rest shall be explored to sensitize the populace. The SSA explained that the newly established revenue board will make tax assessment and payment convenient for tax payers, and will consider alternatives for revenue generation.
“The Kwara of 2019 by God’s grace will not have any resemblance with what we are witnessing now in terms of development,” he said noting that the Governor has made a commendable effort by appointing a capable hand to lead the newly restructured State revenue service, with an academic, Dr. Muritala Awodun as its chairman.