Government revenue targets have been met and, in some cases, regularly exceeded in recent years. Agencies including the Nigeria Customs Service, the Nigeria Revenue Service and other government revenue-generating institutions have reported significant increases in collections.<\/p>\n\n\n\n
Ordinarily, higher revenues would be an achievement to acknowledge and commend. The issue is whether these gains are being achieved at a cost to businesses, investment and economic growth.<\/p>\n\n\n\n
Revenue Collection at What Cost?<\/strong><\/p>\n\n\n\n Government agencies set or are given revenue targets, whether realistic or not, for the taxes, levies and other revenues they are expected to collect from individuals, businesses and enterprises.<\/p>\n\n\n\n The task of collecting these revenues is sometimes outsourced to consultants who are incentivised by commissions linked to the amounts recovered, with allegations that part of these payments is returned to government officials as kickbacks or presented as gratitude.<\/p>\n\n\n\n The pressure to meet ambitious targets and secure these payments can encourage aggressive collection practices, leaving businesses facing taxes, levies and penalties that may be excessive or difficult to justify.<\/p>\n\n\n\n Businesses in Nigeria are already operating in an environment characterised by poor infrastructure, insecurity, unreliable electricity, inadequate roads and high operating costs, leaving many of them with little room to absorb additional financial demands from government agencies.<\/p>\n\n\n\n The burden is not confined to large companies, as small businesses and retailers may face demands from tax and revenue officials at the federal, state and local government levels, sometimes confronting multiple taxes and levies arising from the same or related activities.<\/p>\n\n\n\n A business already struggling to remain open may find itself paying charges on revenue it has barely earned, while the cumulative cost of these demands makes it increasingly difficult to remain in business and operate formally.<\/p>\n\n\n\n The Reform Agenda<\/strong><\/strong><\/p>\n\n\n\n The cost of doing business in Nigeria has remained a longstanding concern, and under the administration of former President Muhammadu Buhari, the Presidential Enabling Business Environment Council (PEBEC) was established to address the regulatory and administrative barriers facing businesses.<\/p>\n\n\n\n Led by the current Minister of Industry, Trade and Investment, Dr Jumoke Oduwole, PEBEC pursued reforms aimed at improving transparency in government dealings with businesses, reducing delays in business registration, permits and other regulatory approvals, strengthening grievance redress mechanisms, improving trade and port operations, and addressing the duplication of taxes and levies imposed by different levels of government.<\/p>\n\n\n\n The changes to Nigeria\u2019s tax administration under the current administration were presented as part of an effort to harmonise the tax system, reduce multiple and overlapping demands, and make compliance easier for businesses.<\/p>\n\n\n\n The reforms raised expectations that businesses would deal with a more coordinated system rather than face separate demands from multiple authorities. For many businesses, however, fragmented charges and multiple tax demands remain part of the cost of doing business, suggesting that the intended simplification of the tax system has yet to be fully realised.<\/p>\n\n\n\n The Customs Revenue Target<\/strong><\/strong><\/p>\n\n\n\n The \u20a611.074 trillion revenue target approved for the Nigeria Customs Service brings the pressure on revenue-generating agencies into sharper focus because Customs operates at a point where government revenue policy directly affects the movement and cost of goods entering the country.<\/p>\n\n\n\n An ambitious target may encourage closer scrutiny of tariff classifications, valuations and declarations as the agency seeks to increase collections, while disagreements over customs assessments can lead to delays in clearing goods and additional costs for importers.<\/p>\n\n\n\n Businesses that depend on imported inputs or finished products can then face higher costs, tighter cash flow and greater difficulty planning their operations.<\/p>\n\n\n\n Customs has a legitimate responsibility to collect revenue, protect the borders and facilitate legitimate trade, and these functions should operate together rather than one being pursued at the expense of the others.<\/p>\n\n\n\n When the amount collected becomes a major measure of institutional performance, however, the pressure to meet a predetermined target can influence how businesses experience assessments, inspections, valuations and disputes, particularly where officers are expected to increase collections within a fixed period.<\/p>\n\n\n\n For importers, the uncertainty created by these processes can be as damaging as the amount eventually paid. Businesses need to know the duties and charges that will apply to their goods and have a reasonable basis for predicting how long those goods will take to clear.<\/p>\n\n\n\n Where assessments are difficult to anticipate, or disputes keep goods at the ports for extended periods, businesses face additional storage and financing costs, while delays in obtaining inputs can affect production schedules and the prices ultimately paid by consumers.<\/p>\n\n\n\n The Cumulative Burden<\/strong><\/strong><\/p>\n\n\n\n The Customs target also sits within a revenue system in which businesses deal with taxes, levies, permits, fees and other charges imposed by federal, state and local authorities. A charge that appears manageable on its own can become burdensome when combined with several other demands arising from the same business activity, particularly for small and medium-sized businesses operating with limited margins.<\/p>\n\n\n\n The time and money required to navigate such a system come directly out of resources that could otherwise support production, employment and investment. Businesses that face rising compliance costs may increase prices, reduce hiring, postpone expansion or scale back operations, while others may choose to remain informal because the cost of operating within the formal system becomes increasingly difficult to bear. The revenue collected from a business at one point can therefore come at the expense of the economic activity that would have generated further revenue over time.<\/p>\n\n\n\n Revenue Generation and Its Cost to People<\/strong><\/strong><\/p>\n\n\n\n Government needs revenue to fund public services and infrastructure, and businesses are required to pay taxes and other charges lawfully imposed on them.<\/p>\n\n\n\n Revenue policy should, however, be designed in a way that allows businesses to understand their obligations, plan their costs and continue operating after meeting them.<\/p>\n\n\n\n Revenue targets of agencies should also be considered alongside the other responsibilities those agencies have to perform, particularly where aggressive collection practices can interfere with trade, investment or business activity.<\/p>\n\n\n\n When businesses are unable to absorb these pressures, the effects are felt by workers and households through lost income, reduced employment and higher prices for food, medicines and other essential goods.<\/p>\n\n\n\n Government has the authority to tax and regulate economic activity, but those powers should be exercised within the law and with regard to the effects of revenue and regulatory decisions on businesses, workers and the households that depend on them.<\/p>\n\n\n\n The \u20a611.074 trillion Customs target should consequently be considered alongside the broader objective of building a tax and revenue system that can raise funds without steadily weakening the businesses from which those revenues come.<\/p>\n\n\n\n Nigeria needs businesses that can survive, employ people, invest, and grow, because sustainable public revenue depends on a productive business sector that remains capable of generating income and paying taxes year after year.<\/p>\n","protected":false},"excerpt":{"rendered":" Government revenue targets have been met and, in some cases, regularly exceeded in recent years. Agencies including the Nigeria Customs Service, the Nigeria Revenue Service and other government revenue-generating institutions have reported significant increases in collections. Ordinarily, higher revenues would be an achievement to acknowledge and commend. The issue is whether these gains are being […]<\/p>\n","protected":false},"author":2,"featured_media":4238,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[],"class_list":["post-4241","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"_links":{"self":[{"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/posts\/4241","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/comments?post=4241"}],"version-history":[{"count":1,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/posts\/4241\/revisions"}],"predecessor-version":[{"id":4242,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/posts\/4241\/revisions\/4242"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/media\/4238"}],"wp:attachment":[{"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/media?parent=4241"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/categories?post=4241"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/placng.org\/Legist\/wp-json\/wp\/v2\/tags?post=4241"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}