Date Published: 01/06/10

Stimulating Internally Generated Revenue in Bayelsa State By Ayebaemi Douglas

Since the 13 years of her existence, one of the greatest developmental challenges facing Bayelsa State is the low Internally Generated Revenue (IGR) base of the State. It is true that the problem of lack of financial capacity and autonomy is not peculiar to Bayelsa State alone, the problem is more painful in Bayelsa State because of near absence of Federally established industries or parastatals. Besides, even most of the oil companies operating in the State do not site their headquarters in Yenagoa. The implication is that although the State is host to several multinational companies such as the Nigerian Agip Oil Company (NAOC) Shell Petroleum Development Company (SPDC) and Chevron, none of these companies pays taxes directly to the Bayelsa State Government.  

With the restoration of peace, the excuse of militancy usually given by the Multinationals is no longer tenable. For example, the Brass Liquefied Natural Gas Company (BLNG) has its Headquarters in Lagos and many concerned Bayelsans wonder whether the decision was informed by the age-old excuse of militancy or lack of capacity on the part of the people. capacity challenge that has been magnified to arrest the development of the State. Workers in the Brass LNG are employed in Lagos, but only casuals are employed in Brass. All these measures short-change the State in terms of boosting her IGR profile. 

The IGR profile of the State  was worsened by the dire consequences of the global economic crisis on the finances of all tier of governments in the country, such that the Nigeria Governors Forum NGF in its First National Round Table on Internally Generated Revenue, IGR sought ways and means of boosting revenue generation in the country. The State has been relying almost solely on one source of revenue namely: monies derived from the Federation Account. Because of the global economic meltdown, revenues accruing to the State are declining. There is vast empirical evidence that taxation correlates highly with economic growth in addition to some spill-over effect on effective service delivery. Taxes have positive welfare effect on the citizens, as adherence to tax laws could result in  greater sophistication and diversification of revenue sources, and by extension the economy.

In the 2009 budget, IGR constituted slightly less that 8% percent, while the 2010 budget projections put the IGR at 7%. Preceding years were not better. In Bayelsa State, the present administration has shown strong determination and renewed commitment in pursuing aggressive infrastructural development in the State. Now, there is an urgent need to explore other statutory means of broadening the revenue base of the State. It is against this background that government has started to implement the Personal Income Tax (PIT), having conducted staff audit and ascertained the accurate workforce of the State.

In Lagos State, the avalanche of accolades that have been coming from all directions regarding the performance of Governor Babatunde Fashola’s led administration has been overwhelming. Lagos State has been able to achieve this feat because it does not rely solely on allocations  accruing from the Federation Account. What is common knowledge is that the State Government and its revenue agencies, especially the Lagos Internal Revenue Service (LIRS) the administrative arm of the Lagos State Board of Internal Revenue Service (LSBIR) have been soliciting the support of Lagos City dwellers; corporate and individual, to support what the government is doing by voluntarily paying their taxes.  

The Bayelsa State Government has started to borrow a leaf from Lagos State, and other States which have benefited optimally from the PIT. Government has also resolved to be committed to use the PIT funds prudentially for job creation, and retention; provision of massive infrastructure; improvement in healthcare delivery services, provision of quality education and other tangible deliverables. 

The Bayelsa State Internal Revenue Committee has stipulated the government schedule of taxes and levies under the jurisdiction of the State Government. These sources include: shops and kiosks rates, death and birth registration, naming of streets, markets taxes and levies, wheelbarrow and cart fees, canoe fees, public conveniences, sewage and refuse disposal fees, customary and burial ground permit fees, signboard and advertisement permit fees among others.

There are conventional and potentially viable source of revenue for the State Government areas in Bayelsa State is the establishment of fish farms. Fish farms, if established and properly managed would generate revenue. Moreover, the State Government has adequately trained ICT human infrastructure that may serve as resource persons when seminars, symposia and workshops are organized. All these could boost IGR in Yenagoa Metropolis. A deliberate Policy of entrepreneurial development will enable people identify and apply their talents within the context of existing opportunities.

In farming communities, local government areas could establish cassava farms or plantain plantations. The commercial cultivation of these food crops would not only boost food production but also become a veritable source of revenue. There are some local government areas that have purchased speedboats and vehicles for commercial purposes but more often than not the key officials of the local government areas use them like private property rather than using them to generate revenue Local governments in Bayelsa State could also establish business centres and employ capable local government workers with the expertise to manage them efficiently. Reprographic services, printing and computer training centres may be established to generate revenue.

From all indications, the Sylva administration in Bayelsa State is poised to reposition the State by improving on the Internally Generated Revenue base of the State to break the over-dependency on crude oil. The 2010 budget has therefore earmarked some government parastatals to commercially viable and financially autonomous entities to become self-funding and revenue generating. These parastatals shall be granted full financial autonomy with necessary legal backing. Some of these parastatals include Bayelsa Palm Limited, Bayelsa State Transport Company, Bayelsa State Housing and Property Development Authority, amongst others.

With the exception of Lagos and Kano State, Nigeria is perhaps the only federation in the entire globe where federal allocations to States are as high as 90% of their revenue. The purpose of the Internally Generated Revenue (IGR) is to collect the proper amount of tax revenues at the least cost to the public, and in a manner that warrants the highest degree of public confidence in our integrity, efficiency and fairness. To achieve that purpose, government will encourage and achieve the highest possible degree of voluntary compliance in accordance with the tax laws and regulations. 

Government has also engaged in systematic sensitization through the media to educate  taxpayers on  a wide range of issues pertaining to their rights and duties under the subsisting tax laws in the State. The thrust of the tax policy is to significantly improve quality of life in Bayelsa State by maximising revenue potential of the State economy without imposing an excessive burden on taxpayers. Thus, the pursuit of boosting IGR is guided by creating efficient, objective and people-friendly structures for tax and revenue administration at all levels and in all departments of government, establish a culture of prudence and accountability in government expenditure and procurement practices and achieve fairness and equity by ensuring that all chargeable persons are brought into the tax net.  

The Ministry of Finance in collaboration with the internal revenue board will also strive to eliminate from the tax system all incidences of corruption and other exploitative practices such as  leakages in the collection process and ensure that all revenues get into designated government accounts. As is obtainable in Lagos State,  Bayelsa State Government should work with the Organised Private Sector (OPS) and other stakeholders to encourage self-assessment and voluntary compliance by sensitising taxpayers to their constitutional obligations and offering the best taxpayer assistance programmes. The State Government should also encourage participatory approach to taxation and sustenance of voluntary tax compliance, which will in turn encourage taxpayer vigilance and constant monitoring and evaluation.

In the 2010 budget, government has identified education and agriculture as two key growth drivers of non-oil sector. Government has earmarked more money for the purchase of fishing trawlers in accordance with the Green House initiative on the cultivation of vegetables. Further, human capital is being enhanced by our investments aimed at improving the quality of education and healthcare. All these are achievable with the enhancement of critical road infrastructure.

With all these critical infrastructure in place, Bayelsa can enhance productivity and competitiveness by investing in the growth of available  human resources through skill acquisition, education, and computer literacy as well as her financial standing through good fiscal management practices to smooth liquidity fluctuations. Bayelsa can also boost IGR through the statutory means and other strategic investments such as credit management and issuance of bonds at times of liquidity downturn.

Like the United Nations asserted in 1968, “The most valuable 100 people to bring into a deteriorating society would not be economists, or politicians or engineers, but rather 100 entrepreneurs”. The Timipre Sylva administration in Bayelsa State must strive to create entrepreneurs that would drive the development process through the revitalization of Small and Micro Enterprises in areas, where the State has comparative advantage. The entrepreneurs will in turn create jobs for the youths so collectively, we can put the ugly past of intense militancy behind us and take a quantum leap for a brighter tomorrow.

Improvement in the capacity of people also helps in increase in investment. While it is expedient for the Bayelsa State House of Assembly to make enabling laws to initiate a progressive and forward looking tax regime, policy makers in the Ministry of Finance and Budget and other parastatals therein to adopt innovative methods of revenue generation, putting into consideration the fact that the 2010 budget is billed to create maximum impact on the lives of the people. 

The up heel task of government is that of breaking from the unedifying consciousness that every government service is provided free of charge. For the past four decades, over-centralization of power has made it possible for the centre to monopolize the financial resources of the country, and this practice has destroyed fiscal federalism in Nigeria including peoples’ attitude towards the payment of taxes. Like Lagos State, which blazes the trail of IGR in Nigeria, the Bayelsa State Government should engage the populace in more sensitization and inculcate a positive attitude towards taxation and entrepreneurial spirit to make these policies work. That would indeed show that the State presided over by Governor Timipre Sylva is working. Those in charge must implement a viable and sustainable tax policies and strengthen the  relevant institutions of Civil Society to entrench the mechanisms of good  That way Bayelsa State, would escape the misery threshold index that stares many States of Nigeria in the face.

Ayebaemi Douglas, wrote from Yenagoa