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Emmanuel Ado
Until 2015, the defunct Kaduna State Internal Revenue Board was an impediment to the aspiration and capacity of previous administrations of the state to deliver on its social contract with the citizens of Kaduna State, as contained in Section 16 of the 1999 Constitution of Federal Republic of Nigeria, as amended, due to its abysmal performance in revenue collection. The failure of the revenue agency can only be appreciated, against the Economic Objectives and Directive of State Principles, under which the various governments are obliged to ensure the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunity. To further buttress the seriousness attached to the attainment of the objective, Section 14(2b) explicitly states that the security and welfare of the citizens shall be the primary purpose of the government.
The Kaduna State Board of Internal Revenue, before the reforms and eventual transformation to Kaduna State Internal Revenue Service (KADIRS), was a typical example of all that is fundamentally wrong with most government agencies: it lacked accountability and focus, what Steve Dobberowsky described as “organizational hesitancy,” which more or less limited its capacity to achieve set targets. The board willfully refused to collect taxes and levies, and when it managed to do so, more than 80 per cent of the revenue ended up in private pockets, denying government the revenue to deliver on its lofty objectives. The Board notoriously got away with being a significant obstacle to the attainment of government objectives fundamentally because former administrations lacked the political will to reform the board.
Governor Nasir El-Rufai, on assumption of office in 2015, inherited not just a revenue agency that was dysfunctional but also a public service that was equally unproductive because of an aging workforce that lacked the capacity to deliver service. Like El-Rufai has severally argued, “No nation develops beyond the capacity of its public service.” His utter disdain for the service,and public institutions generally is because they have greatly contributed to the underdevelopment of Nigeria. It’s consequently not surprising that the very first executive decision of El-Rufai was the urgent reform of the Kaduna State Revenue Board and the Kaduna State Public Service Revitalization and Renewal Programme, so as to improve the capacity and efficiency of both to deliver effective service. The reforms have largely resolved the critical issues that had hitherto impeded their efficiency, especially low revenue collection, productivity, redundancy, duplication of roles, high proportion of aged workers, and unskilled staff.
When El-Rufai took over, he basically faced two clear choices: reform the public service or perish. Very predictably, he chose an encompassing reform that would improve the internally generated revenue (IGR), which stood at an abysmal N800 million a month, an amount that was grossly inadequate to cover the overhead expenditure of the public service. Working with Ifueko Omoigui, former chairman of the Federal Inland Revenue Service (FIRS), El-Rufai embarked on a surgical restructuring of the Kaduna State Revenue Board into an efficient and effective service capable of raising the much needed finances. To give legal backing to the reforms, the Kaduna State Tax (Codification & Consolidation) Law, 2016, was enacted and signed, ushering in a new era in tax administration in Kaduna State. The key highlights of the law include making Kaduna State Internal Revenue Service the sole revenue collection agency, harmonization and centralization of all revenue collection and the prohibition of cash collection. The blockage of leakages was the killer punch and in no time the desired results started rolling in, such that, by 2017, the IGR had increased from N11.8 billion in 2015 to N26.53 billion to N30 billion by 2018 and by 2019 over N44 billion.
By making cash collection illegal, the huge revenue resources that hitherto ended up in private pockets started flowing into the coffers of the state government, for the execution of the myriads of projects that El-Rufai had promised the people of Kaduna State.
Though the swift implementation of the Treasury Single Account (TSA) in 2015, the state brought in over N25 billion scattered in more than 470 bank accounts into its TSA account with the Central Bank of Nigeria.Moving forward, it was clear that this wasn’t enough to sustain government operations, that the key remained getting KADIRS to function optimally, especially with El-Rufai’s singular ambition to generate a minimum of N70 billion monthly that would wean the state from its dependence on the “miserable” allocation from the Federation Account.
All indications point to the realization of the medium-term objective of El-Rufai, as the KADIRS has within four years met the acceptable target of over N40 billion. From a modest N2 billion, the service is consistently generating well over N3 billion monthly, which is a far cry from the paltry N800 million that was the standard collection during the Peoples Democratic Party(PDP) era.
Though the key to the successes recorded in increasing the IGR are clearly the reforms, the game changer is the competent team that was hired to drive the reforms. Though Mukhtar Ahmed, the pioneer chairman laid a solid foundation, there is no doubt that his lack of tax background limited his achievement, an advantage Zaid Abubakar, the man El-Rufai has entrusted with the herculean task of taking the service to the next level, has. Abubakar comes to the job with several advantages, chief being his background as a core taxman and the fact that he is coming from the FIRS, where as a tax auditor he had the duty of ensuring compliance by taxpayers. In tax collection, compliance is critical, it makes a whole of difference.
Thankfully, Abubakar hasn’t disappointed. By reorganizing and empowering the enforcement unit, creation of a tax intelligence and high net-worth unit, total automation of motor vehicle administration and improved staff welfare packages, he has increased average monthly collection to a record N3 billion and in the process surpassed the target of N43 billion set for the agency in 2019. It’s important to stress once more that no new taxes have been introduced, rather, the giant strides are due to continued blockage of leakages and active enforcement of Pay As You Earn (PAYE), which this year alone has led to the collection of over N9.4 billion in backlogs from institutions like the Ahmadu Bello University, Zaria, and Access Bank. El-Rufai, despite being an alumni of ABU, Zaria, bluntly refused to intervene on behalf of the institution, thus sending a strong message that KADIRS would not in anyway be constrained by government from performing its legitimate functions.
