FIRS seeks law to introduce road tax

Mohammed Nami, executive chairman of the Federal Inland Revenue Service (FIRS), says a proposal has been sent to the federal government for a law on road tax. 

Nami said this on Wednesday at an interactive session organised by the house of representatives committee on finance on the 2022-2024 medium term expenditure framework/fiscal strategy paper (MTEF/FSP) for ministries, departments and agencies (MDAs) in Abuja.

This is coming days after the federal government approved a new policy for tollgates across the country.

At the public hearing on Wednesday, Afolabi Olalekan, a member of the committee from Osun state, asked Nami to explain what FIRS has put in place to tackle tax evasion by people in the informal sector.

“What is your agency doing to extend your tax drive to the informal sector. Because I believe the informal sector is a veritable area where we can get a lot of money, especially this period that the county is relying on borrowing to finance budget deficit,” he asked.

Responding, Nami said FIRS is working on several measures to ensure that the informal sector pay taxes to the federal government.

He said one of the measures include the introduction of road tax.

Nami said when FIRS and the federal government finalises the framework on road tax, the proposed legislation would be sent to the national assembly.

“What we have done on the informal sector at a time was try to propose what we call a presumptive tax to the national assembly, but in the course of doing that we face a bit of challenge and we did not submit the proposal yet, simply because we discover that there is an act of the national assembly that exempted businesses with a turnover of about N1 to N25 million,” he said.

“So if you already have that, you can find it difficult to say come and pay presumptive tax. Presumptive tax is a tax that we just give you form to say based on your own estimate, how much have you generated this year and you say 12 million, then we say pay maybe six percent of that 12 million and you go because you are not an organised sector.

“But there is a law which has exempted every business with a turnover of N1 and N25 million so you find it difficult to implement such a thing.

“The second thing we are doing of which we have already done is to create a department called intelligence, strategic data-mining and analysis department; which the only thing these young boys and girls do on a daily basis is just to gather intelligence on companies and particularly these informal sector, analyse them and then escalate those gap that they identify for the purpose of tax assessment and tax collection.

“Number three thing we are thinking of, and we will surely come back to the national assembly on that, is to introduce road taxes. Road tax is necessary because all over the world there is no way we would see people that will use roads for free.

“As is it today, even if you are able to give an entire N10 trillion to the Federal Republic of Nigeria, it will not be able to fix the roads in Nigeria, just the roads in Nigeria alone.

“So what we have decided to do is to propose the introduction of road taxes to the federal government through our special tax operations department so that at least 50 trucks that would be plying these roads for free at any given point in time, comes across a toll gate or probably somewhere that we are going to use electronic device to collect it without necessarily erecting toll gate.

“We are aware that the owners of these trucks, they don’t pay anything to the government, they don’t get the FIRS certificate. So up to 15 or 20 trucks that will ply the road that is built with personal income tax that I pay and you pay and then they don’t pay taxes. That is what we want to identify.”