Recently, Governor Ambode of Lagos State was boasting of saving N3bn monthly from the running costs of governance. I believe he could have done a lot better, but there are a lot of wastages and leakages in the system.
The Lagos State House of Assembly on Thursday, December 31, passed into law the N662.588bn Year 2016 Appropriation Bill presented by Governor Akinwunmi Ambode on Thursday, December 17, 2015. A breakdown of the budget revealed that N278,909bn will be spent on recurrent expenditure while N383,678bn on capital expenditure with its internal Generated Revenue , IGR pegged at N542,873 Billion of which N119.714 Billion would be funded through deficit financing constituting 0.41 percent of the State GDP.
Lagos State gets most of its income through IGR. Internally Generated Revenue (IGR) is the revenue that state governments generate within the areas of their jurisdiction. The various sources of internal revenue available to state governments include taxes, fines , licenses and fees, earnings & sales, rent on government property, interests and dividends, among others. The capacity of a state government to generate revenue internally is a crucial consideration for the creation of a state government.
The expected IGR of Lagos State this year is N542,873bn which is contracted out to be collected by a firm called the Alpha Beta Consulting. The firm is owned by Senator Bola Hamed Tinubu, the political God Father of the State Governor. The expected commission for this Tax collector Service this year is about N75bn. This is a colossal amount to be paid to a Private individual’s firm when there is massive poverty in our land. The commission is more than the budget of some states in Nigeria.
If Governor Ambode led administration really want to be prudent in his management, he should consider taking the Tax collection services in-house to save money and this will subsequently reduce the State recurrent expenditure.
Also, due to the high unemployment rate in the State, it would be better to increase the LIRS budget to create middle-class public-sector jobs in professional tax collection than throw money at low-paying private-sector contractors who cannot do the job as well.
Alpha Beta has been collecting IGR for Lagos State since 1999, if the state has put in place a permanent alternative structure since then it would have matured and the state would have been saving money. No one knows the contractual agreement between the Lagos State Government and the alpha Beta Consulting.
There have been reports of heavy handedness of the tax consultants when they resort to use abusive tactics. With this type of feedback, the State has failed to serve the public interest.
I can say in very clear terms that private tax collection does not save or generate any money. It costs a lot of money and risks the privacy of taxpayer information. Taxes don’t have to be taxing.
By Michael Emiabata