Lagos State governor, Mr. Babajide Sanwo-Olu, has said the current tax revenue being generated by the Lagos State Government is too low to government’s actual projection and the state’s tax revenue potential.
The governor, who made this remark when he hosted members of Presidential Committee on Fiscal Policy and Tax Reforms, led by the Chairman, Mr. Taiwo Oyedele, at the State House, said Lagos had the capacity to widen its tax base and enhance efficiency in collection mechanisms but could not do so due to some fiscal and tax administration frameworks that exclusively vested the authority in the Federal Government.
Sanwo-Olu lamented that the state government was carrying out governance with huge fiscal burden as its revenue collections were far below its governance responsibilities, estimating that for the government to meet its socio-economic obligations for the people living in the state, it will require over N7 trillion yearly budget.
According to him, the highest budget the state has implemented in a year is just above N2 trillion due to constraints in national tax policies.
The Governor clarified: “For us in Lagos, we know too well that we have capacity to do a lot from the revenue generation standpoint; more importantly, from the effective generation and utilization of the tax. During our bilateral meetings in preparation to present next year’s budget, we pulled numbers up to N7 trillion based on our needs. But we are constricted by only the amount of revenue we can generate and pegged the value at N2.2 trillion.
“This speaks to the huge gap that we have in our capacity to develop the economy quicker and faster. We can no longer continue to complain. What are those things we can do to improve our revenue stream and our ability to be able to leapfrog and take governance in a more audacious way. This engagement with your committee is critical at this time, as you go round states to have feelings of what the bottlenecks are”, he added.
Sanwo-Olu pointed out that since the committee’s objective is not to generate abstract and non-implementable documents, but to practically identify tax issues facing sub-national governments and eliminate bottlenecks, the committee members should come up with quality intervention that would help the states attain their full potential in revenue generation and fiscal sustainability.
He advocated: “We all need to work collaboratively on this objective. If all constraints are attended to, we should begin to see monumental changes in our revenue projection. The potential is there and the numbers show the results we can achieve if fully explored, but we cannot sit back and think things will change overnight if we did not take the right approach to resolve the issues.
“We expect every member of this committee would put all your skills and mental resources into this task. I believe the committee will achieve the objectives for which Mr. President set it up. As a state, we are ready to give you all the support required. We will open our books and share data to learn where we also need to make changes for higher revenue performance”, the governor added.
In his remarks, the committee’s chairman said Lagos was the first state to be visited by the team in its nationwide consultation, noting that the state’s achievements in tax reform had been a model that had been adopted by other states.
Oyedele maintained that Nigeria needed to address her revenue problems by developing a robust tax system and quality spending.
He said: “We are no longer at a point where we can continue to celebrate incremental progress in revenue generation; we need to accompany it with transformational shift in quality of spending of the generated revenue. Our spending on the ration of GDP is the lowest in the world, we need to address this without taking attention away from the quality of spending.”
