Cost of revenue collection gulps N214.29b in Q1 2024 

Sparks calls for revenue collection harmonisation

Revenue collecting agencies, the Federal Inland Revenue Service (FIRS), Nigeria Customs Service (NCS), and Nigerian Upstream Petroleum Regulatory Commission (NUPRC) shared N214.29 billion as logistics cost in the first quarter of 2024.
 
Abuja-based think-tank, Agora Policy, reported that the N43 billion cost of collection by FIRS in January exceeded what each state got from the Federal Account Allocation Committee (FAAC).
   
According to Agora’s report, the issue with the cost-of-collection arrangement is not just the agencies collecting more revenue, but the disproportionate allocation at the expense of states facing numerous challenges. 
 
The report reads, “The agencies are getting more allocations at the expense of others, including states and zones that have a high number of citizens to cater for and a slew of challenges to tackle.”
 
Analysis of the FAAC disbursements, published by the National Bureau of Statistics (NBS), shows that the agencies collectively received N214.29 billion in Q1 2024, up from N92.85 billion in the same period the previous year, a 131 per cent increase.
 
FIRS and NUPRC deducted about four per cent of the cost of revenue collection, while the NCS received seven per cent . 
 
The cost of collection is usually deducted at the monthly FAAC meeting before the federally collected revenues are shared with the three tiers of government and other statutory recipients.  
 
NCS witnessed a more than two-fold increase in its cost of collection, from N29.92 billion in Q1 2023 to N59.85 billion in Q1 2024. The 100.18 per cent rise suggests enhanced revenue collection activities, likely driven by improved border control measures or a surge in import and export activities, The Guardian gathered.
 
FIRS reported a significant 115.53 per cent increase in its collection costs, from N46.60 billion in Q1 2023 to N100.40 billion in Q1 2024.

This substantial growth reflects expanded tax collection efforts, potentially due to better tax compliance measures and increased economic activities.  
 
On its part, NUPRC saw the most dramatic rise of 230.68 per cent from N16.34 billion in Q1 2023 to N54.05 billion in Q1 2024. This surge indicates intensified regulatory activities in the upstream petroleum sector, possibly driven by new oil field discoveries and increased crude oil production.  

The Presidential Fiscal and Tax Reforms Committee had recommended reducing the cost of collection to one per cent to align with global best practices. 
 
During stakeholders’ consultation with public policy analysts and journalists in Abuja, the committee, led by Taiwo Oyedele, recommended the reduction to one per cent. 
 
Oyedele noted that the cost of revenue collection in the country ranges from four per cent to 35 per cent, a situation he said was unacceptable.
 
Part of the recommendations of the committee was the consolidation of revenue collection under one agency and the renaming of the FIRS as Nigerian Revenue Service (NRS) to serve as the sole revenue-collecting agency in the country.