According to research by The DAILYPULSE REPORT, three significant revenue-generating organisations in Nigeria withheld N533.11 billion in revenue collection expenses in the first seven months of 2024.

The Nigerian Upstream Petroleum Regulatory Commission, Federal Inland Revenue Service, and Nigerian Customs Service are among the organisations.

This amount, which was obtained from Federation Accounts Allocation Committee reports that were released by the National Bureau of Statistics, represents a significant 99.85% rise over the N266.75bn that was reported during the same period in 2023.

About 4% of the revenue collection cost was withheld by the FIRS and NUPRC, and 7% went to the NCS.

The federally collected funds are distributed to the three tiers of government and other statutory recipients after the cost of collection is typically subtracted at the monthly FAAC meeting.

Out of the three revenue-generating organisations, the FIRS withheld the most portion of the collection costs in the first seven months of 2024, amounting N254.82 billion, or around 47.8% of the total N533.11 billion.

Value Added Tax, corporate income taxes, and other revenue streams vital to the government’s fiscal operations are covered by FIRS’s portion.

The cost of collecting was deducted by FIRS in 2024 at a rate of N254.82 billion, up 61.55 percent from N157.73 billion in 2023.

The agency collected N43.35 billion in January 2024, a considerable increase from N18.14 billion in January 2023, according to monthly breakdowns that show erratic tendencies.

The largest surge was in July 2024, when FIRS withheld N55.13 billion, a 0.01 percent increase over July 2023’s corresponding amount.

The second-largest receiver was the NCS, with N147.64 billion, or roughly 27.7% of the total amount distributed to the agencies.

This number demonstrates the NCS’s responsibility in administering customs duties and excise collections from imports and exports. The rise in import duty is probably the cause of the agency’s increased collection costs.

In the first seven months of 2024, NCS recorded a total cost of collection of N147.64 billion, indicating a significant increase of 114.49 percent over N68.86 billion during the same period in 2023.

A total of N130.64 billion, or around 24.5% of the collecting cost, was withheld by the NUPRC. Given that NUPRC is in charge of the upstream oil and gas industry, which continues to be a vital component of Nigeria’s economy, its stake is noteworthy.

The upstream oil and gas regulatory body in Nigeria, NUPRC, withheld N130.64 billion in 2024 as a cost of collection, a substantial rise of 225.33 percent from N40.16 billion in 2023.

The three revenue-generating agencies, FIRS, NCS, and NUPRC, reported a total cost of collections of N78.30bn in January 2024, a 129.98% increase over N34.05bn in the same month the previous year, based on a monthly breakdown.

The total amount collected in February 2024 was N66.46 billion, up 142.03% from the N27.45 billion collected in the same month in 2023.

The agencies shared N69.54 billion in March 2024, up 121.79% from N31.35 billion in March 2023.

Collections in April 2024 were constant at N69.54 billion, quite similar to the data from the previous month, but a considerable rise over N31.35 billion in April 2023.

Collections increased in May 2024 to N80.52 billion, up 159.09 percent from N31.07 billion in May 2023.

With FIRS’s enhanced revenue drive, the overall cost of collections increased to N76.65 billion in June 2024 from N38.24 billion in June 2023, a 100.47 percent increase.

The greatest collection results for the period were reported in July 2024, totalling N92.11bn, up 25.85% from N73.24bn in July 2023.

The increase may be a sign of more stringent regulations, but it also shows how inflation and the depreciation of the naira have increased tax revenues.

State finance commissioners have also demanded a review because to the notable rise in the cost of tax collection by the FIRS, NCS, and NUPRC.

A new Agora Policy paper claims that the problem with the cost-of-collection system is not only that the agencies are making more money, but also that states that are dealing with a lot of difficulties are being disproportionately affected.

The Presidential Fiscal and Tax Reforms Committee, headed by Taiwo Oyedele, recommended lowering the cost of revenue collection to 1% during a stakeholder consultation with public policy analysts and journalists in Abuja. This recommendation would put the country in line with international best practices, where even high-revenue nations like South Africa spend less than 1%.

Oyedele pointed out that the country’s present revenue collection costs vary from 4% to 35%, which he called completely unacceptable.

Sheriffdeen Tella, an economist and professor of economics at Olabisi Onabanjo University, commented that operational costs incurred during revenue collection are included in the cost of collection.

However, he pointed out that an audited account will ascertain the accuracy of the existing charged %.

“One of the ways to collect revenue is through the use of technology, but that comes with costs,” he stated. Alternatively, it is probable that they had to go to acquire some revenue. That adds to its expenses as well.

However, I believe that unless their account is audited, it would be challenging to determine the precise amount and challenging to determine how much was spent on charges. Allow them to examine their accounts; if it is done correctly, the auditors will inform them if the amount is excessive, at which point there may be agitation for a lower cost collecting %.

According to a different economist who wished to remain unnamed, the expense of collection is about the same as what the agencies pay to get the money.

“They deploy a lot of manpower, technological infrastructure, and other necessary items,” the analyst said. For this reason, the money received from the cost of collecting covers a large portion of their operating expenses as an organisation. Even though their budget has been authorised, the majority of the money they need to operate those institutions comes from the money collected via costs.