Babatunde Fowler

Babatunde Fowler

Bringing innovation to tax collection at FIRS

There are no current records on the number of registered companies that are currently doing business in Nigeria. This dearth of information is not helped by the economic recession that has seen many companies fold up in the past one year.

When the number of companies doing business could be correctly ascertained, it was a Herculean task getting a majority of them to pay tax. Now, it is going to be a near impossibility to know how many companies are still in existence, let alone determine how many of them are meeting their obligations to the government through payment of taxes. Add this to the proclivity by many Nigerians to avoid payment of tax. What you have is a complex situation in which government itself cannot hazard a guess about how much it loses in taxes.

That was the ugly situation Tunde Folwer, executive chairman of the Federal Inland Revenue Service (FIRS), met when he assumed office in 2015. A faint-hearted man would have been overwhelmed by the enormity of the challenge of reversing what was obviously a trend – making organizations and individuals that had for many decades enjoyed a ‘tax holiday’ to embrace a new era of tax payment. Not Fowler.

 

New Sheriff in town

Fowler arrived in Abuja with the kind of credentials to earn for him the description of The New Sheriff in Town. In a period of eight years, he had succeeded in turning Lagos, the nation’s commercial capital, which had hitherto hosted the highest number of tax dodgers, into the state with the highest internally generated revenue (IGR) in the country.

The Lagos State Board of Internal (LSBIR) revenue under him recorded a sharp increase of N3.6 billion per month in January, 2006, to a monthly average of N20.5 billion in 2014. The agency also recorded a remarkable increase in the quality of service delivery, improvement in the use of information communication technology and innovative processes in tax administration. It also championed a massive enlightenment campaign for tax education and administration in Africa.

In one of his innovative ways of raising awareness on tax education and citizens’ tax obligations among children, Fowler introduced a competition for school pupils in which cash prizes and scholarship awards were given to those that were successful. The competition was funded by the boarded that he headed.

 

 

 

Breakthrough

Fowler’s stewardship at FIRS since assuming office has proved that he is indeed in a round peg in a round hole – the right man for the onerous tax of revamping Nigeria’s tax system.

At the last count, the agency has successfully identified over 700, 000 companies that have never paid taxes of any form since establishment and was, by December, 2016, expected to fish out over 10 million individuals that have also not paid tax before. The figure would bring the total number of individuals registered in the country’s tax system to 20 million, which is still a far cry from the over 60 million individuals that should pay one form of tax or the other.

Bringing 700, 000 and 10 million organizations and individuals, respectively, on board the tax system is unarguably a major breakthrough by FIRS and veritable new sources of income for the government.

Fowler has found, though not surprisingly, that getting Nigerians to pay tax is no mean task. The task is made even more daunting by the fact that over 80 per cent of Nigerians are employed in the informal sector, where paper work is not involved in the day-to-day businesses.

The reluctance to pay tax is in line with the common understanding that people generally resist change, especially the type of change that would make them part with money, even if it is legally government’s money – a global phenomenon, actually.

 

Aggressive tax drive

Fowler has created a new unit in FIRS, with inspectors armed with laptops for registration of individuals and organizations, for the purpose of checking and tracking them to ascertain whether or not they have been paying taxes. It is a development that business owners find quite unwelcome, for obvious reasons.

This is the strategy that was used in discovering the organizations and individuals that have never paid tax. The agency hopes to haul in more organizations and individuals into its tax net using this method.

 

Tax waiver as incentive

Fowler has introduced a three-year waiver on interests and penalties for organizations and individuals that are registering newly on the tax system, to make it more convenient for them to embrace the new regime. “We will give them a 45-day window to come forward and register, and that will make them eligible for that waiver”, he said of the incentive. But he also knows it may not be enough to convince them.

“A lot of people who are not in the tax net are a bit jittery or afraid to come and register, thinking that we might go back two or three years, and the amount might be considerable”, Fowler said. But he also warned that FIRS might impose stiff penalties on organizations and individuals that fail to register. The penalties might include making them pay back taxes, plus interests. “We will also consider criminal prosecution of chief executive officers and board members”, he said.

Fowler wants the controversial issue of increase in value added tax (VAT), from the present five per cent, to be approached cautiously, because of its socio-political implications. He says though it is government’s responsibility to make a pronouncement on issues relating to an increase on VAT, the economy is not ready for it. His worry is that getting Nigerians to accept the increase will not be an easy task.

“The level of compliance was too low, so that if we increased the rate of VAT, it would be punishment and unfair to those who are collecting and remitting it”, he said.

Fowler has consistently spoken against Nigeria’s overdependence on oil as the major source of revenue. He has been vindicated by the drop in international oil prices, which has put the nation’s economy on tenterhooks, with the result being the current recession from which the country is struggling to get out.

He has a very ambitious revenue projection of N5.2 trillion for FIRS from tax in 2017. This may seem unrealizable. But for a man whose record in Lagos is still a reference point on IGR, Fowler beliefs the target is achievable. Nigerians must believe him.

 

Profile

Fowler, 60, holds two bachelor’s degrees from the University of Wisconsin, Whitewater and California State University, Los Angeles, respectively, and an MBA from the California State University, Dominguez Hills, in the United States.

He did his internship with Avon Products Inc, New York, after which he was employed by Johnson and Johnson, New Jersey, also in New York, under a one-year MBA International Development Programme. He was transferred to Johnson and Johnson Nigeria between September, 1982 and September, 1983.

A Fellow of the Chartered Institute of Taxation of Nigeria and Business Management Association of the United Kingdom, Fowler made a career change to banking in January, 1984 when he joined Commercial Bank (Credit Lyonnais) Nigeria, working in international banking, risk management and clearing operations. As the bank’s treasurer and foundation member of the Money Market Association of Nigeria, he introduced some reforms that had positive effects on the banking industry.

He left Credit Lyonnais in March, 1990 to join Chartered Bank the following month as a senior manager, rising to the position of general manager by March, 1994, before leaving the banking industry for a career in the Lagos State public service, with appointment as the pioneer permanent secretary and executive chairman of LSBIR.

 

Awards

Fowler has several awards under his belt, among which are Honorary Senior Member of The Chartered Institute of Bankers of Nigeria; Honoris Causa by the Certified Board of Administrators of Nigeria and Outstanding Government Personality of the Year (2014), by the Leadership Award for African Achievers.