FCT, Revenue Drive and Political Will

The Federal Capital Territory Administration (FCTA) is revving up the drive to maximise internally generated revenue (IGR) portfolio in the nation’s capital with the emergence of Nyesom Wike as minister who has provided the political will, while the revenue agency (FCT-IRS) embraces cutting-edge measures to boost revenue haul. Ndubuisi Francis examines the salient issues

Abuja, Nigeria’s capital city is reputed to be not just one of the fastest growing capital cities in Africa but one of the fastest in the world.

With an estimated population of over 3.8 million people, the demands of playing host the nation’s capital city are enormous just as the potential are vast.

For the FCTA, harnessing the huge potential calls for a delicate balance between meeting its responsibilities of ensuring the well-being of the teeming residents and getting the latter to fulfill their civic obligations without unnecessarily making the burden heavy.

The city is confronted by sundry challenges ranging from lack of portable water system, countless abandoned projects, unlit streets, deplorable roads in the  satellite towns and villages, perennial flooding and poor transportation system to deteriorating security, among others.

While huge financial resources are needed to address these challenges, previous administrations in the FCT, particularly in the last eight years did not help the situation.

However, the appointment of Nyesom Wike, a former governor of Rivers State has increasingly rekindled hope that the narrative might change.

The Revenue Challenge

No doubt, revenue challenge is real and until recently posed one of the most daunting challenges in the FCT. It has not only torpedoed the completion of several projects, but denied Abuja residents the benefit of enjoying good social amenities. Under the current dispensation, the FCTA appears to be giving practical expression to efforts aimed at addressing paucity of funds.

In a recent interview, the Executive Chairman of the Federal Capital Territory-Inland Revenue Service (FCT-IRS), Haruna Abdullahi said the revenue agency which is the youngest member of the nation’s Joint Tax Board (having commenced operations in 2018), currently collects an average of N145 billion internally generated revenue (IGR) annually, up from a paltry N40 billion per annum previously.

Abdullahi believes that with the new twist, in addition to the expected 50 to 60 per cent revenue rise, the nation’s capital has set a target of generating N300 billion annually, which will put it in a comfortable  position to fully fund its budget from IGR sources. According to him, the FCT has taken steps to increase IGR by making it easier for people to file their taxes and meet their obligations. These steps include launching a self-service portal and improving the efficiency of the Integrated Payroll and Personnel Information System (IPPIS) and the Government Integrated Financial Management System (GIFMIS).

The FCT has also implemented new measures to collect taxes from businesses that operate in Abuja. These measures include ensuring that withholding tax deductions are sent to the FCT-IRS and that businesses that do business in Abuja register for and pay their taxes in the FCT.

However, for residents to fully enjoy  certain services they enjoyed in the past and which the improved revenue drive in the city will offer them henceforth, the FCT-IRS is making it mandatory for them to produce their tax clearance certificates (TCCs).

The Political Will

According to Abdullahi, institutions like FCT-IRS which focus on revenue are confronted by several significant challenges “And revenue issues are political issues, you which need the political support, the political will to overcome a lot of these challenges. And that’s why I mentioned the fact that the honourable minister now is supporting the Service politically. And that has really lessened the burden.

“So, all stakeholders, I believe now in the city see that the political will is there. And even internal stakeholders, our colleagues and all have seen that, look: this is the direction of the bureaucracy of the administration. And certainly you would not joke with it.”

With Wike demonstrating the much-needed political will, and now showing that revenue issues are in the forefront for him, Abdullahi believes the FCT-FIRS is better placed in its revenue drive mandate.

Optimising the Revenue Drive

One of the major moves made by Wike immediately after his appointment was to seek and get presidential exemption of the FCT from the Treasury Single Account (TSA) web. The minister himself had explained that being tied to the TSA bottleneck would have been antithetical to the pace with which he wants things  to be done expeditiously.

Less than a month ago, the minister approved the draft proposal on property tax regulation, designed to significantly boost IGR in the nation’s capital.

According to the FCT-IRS boss, following the ministerial  approval, an inter-agency stakeholder committee had been constituted to finetune the draft regulation after which it would be returned to the minister to sign into law and subsequently gazetted.

Abdullahi, who applauded Wike’s determination to turn around the fortunes of the FCT, noted that the Service had also inaugurated a committee for the full implementation of the Capital Gains Tax (CGT) law in the FCT.

A CGT is 10 per cent is derived from the disposal of capital assets, including stocks, bonds, and real estate, among others. It is tax from the sale of any capital asset where the sale price exceeds the purchase price of the investment.

Abdullahi stated that previously, there was very little compliance in terms of CGT, adding that having briefed the minister and an inter-agency collaboration in place, the FCT-IRS would now begin to implement the capital gains tax fully.

The FCT-IRS Executive Chairman is upbeat that with the Property Tax law in the offing, CGT already on the verge of full implementation of Section 85 of Personal Income Tax Act (PITA) and Section 31 of the FCT Internal Revenue Service Act, 2015 fully implemented, the revenue profile of the FCT “should take us to certainly above 50 to 60 percent of what we are doing at the moment, and that is a huge positive impact on the bottomline.”

For him, the FCT is committed to optimising its IGR and believes that with political will fully guaranteed, it can achieve its goal of fully funding its budget from IGR.

However, while the quest to maximise revenue generation takes pre-eminence,  improving the ease of doing business in the FCT is imperative, so is infrastructure development and other necessities. Despite in terms of ease of doing business, the FCT’s scorecard from the Presidential Enabling Business Environment (PEBEC) is not inspiring.

“The FCT is not performing as well as it should be. We have been working on harmonisation issues over the last few months and have signed an MoU between FCT-IRS, FCTA, and the six area councils to harmonise our taxes.

“However, tax collections between area councils, states, and federal are a constitutional issue, and there are overlaps. Through harmonisation and collaboration with revenue-generating agencies in the FCTA, we hope to make living in Abuja easier and improve the federal capital’s ranking in ease of doing business.

“Local councils are entitled to 10 per cent of IGR, and we have clarified with the area councils that FCT is remitting these funds. We hope to harmonise kiosk and business premise taxes and make it easier to do business all over the city.  Inter-agency collaboration is now taking place amongst revenue-generating agencies driven by the FCT-IRS, and we work together and support each other for the common goal of improving revenues.

“Our hope is that the next ease of doing business report will reflect an FCT that has bettered itself,” he said.

While the FCT-IRS, headed by a suave and purposeful Chairman is deploying cutting-edge measures to boost IGR, residents of Abuja are waiting to witness a new lease of life in the area of infrastructure development, especially in the satellite towns and suburbs as well as reprieve from mounting challenges worsened by a wobbly economy.

Residents of the Nyanya-Mararaba axis of the Federal Capital Territory (FCT) will want to heave a sigh of relief if the Apo-Karshi is completed to ease the heavy traffic on that axis

The 13.25-kilometre road, first awarded in 2011 has suffered inexplicable delay.

Also, the imperative of an effective,  efficient and seamless mass transit system for a modern federal capital city cannot be over-emphasiSed.

Well lit roads and streets, communities that are free of street urchins and anti-social elements is befitting of the Nigeria’s federal capital.

Residents of several communities in the FCT are troubled by insecurity, including the operations of criminals commonly known as ‘one chance’ operators.

While the revenue agency is striving to increase the revenue haul in the FCT, the minister and the FCTA as a whole should provide the necessary relief to the residents from the multifaceted challenges facing them.

The political leaders and others running the affairs of the FCT must remember that generating revenue is important, but there must be a judicious application of the funds so realised. Urgently fixing the problems confronting the FCT, especially the most pressing ones is the way to go.

They should ruminate over the words of Chester A. Arthur: “The extravagant expenditure of public money is an evil not to be measured by the value of that money to the people who are taxed for it.”