AN OPEN LETTER TO THE PRESIDENT OF NIGERIA ON: WHY BABATUNDE FOWLER MUST NOT BE REAPPOINTED AS EXECUTIVE CHAIRMAN OF FEDERAL INLAND REVENUE SERVICE FOR A SECOND AND FINAL TERM OF FOUR (4) YEARS – BY CONCERNED STAFFS OF FIRS
Prior to the appointment of Babatunde Williams Fowler as the Executive Chairman of the Federal Inland Revenue Service (FIRS) in August, 2015, his predecessors Mallam Balama Manu and Mrs. Ifueko Omoigui Okauru had redefined the dynamics of tax administration in Nigeria from a mere government revenue agency responsible for collection of tax revenues to a world class organization focusing strictly on effective administration of tax laws and tax policies taking into account the fundamental principles/criteria of a good tax system which include; fairness (equity), administrative and compliant convenience, certainty and efficiency. This was made possible because of the recommendations of the Study and Working Groups on Tax Reforms in the Nigerian Tax System.
- BACKGROUND ON THE NIGERIAN TAX REFORM AGENDA
The Study Group on the Nigerian Tax System under the chairmanship of Professor Dotun Phillips was inaugurated by then Finance Minister Mallam Adamu Ciroma on 6 August 2002 with an eleven-item terms of reference that were all tailored at repositioning the tax system for better efficiency. The Study Group submitted its report in July 2003. A Working Group chaired by KPMG’s Seyi Bickersteth was inaugurated on 12 January 2004 by Finance Minister Dr. Ngozi Okonjo-Iweala. The terms of reference of the Working Group were to evaluate the recommendations of the Study Group; prioritize the set of strategies required to reform the tax system; and segment the strategies to be implemented into:
- Short term Reforms to the Tax System (six months);
- Medium term (two years); and
- Long term (five years).
The Working Group submitted its report to the Federal Government in March 2004. While there were some areas of divergence between the report of the Working Group and that of the Study Group, both reports agreed on the objective of the reform which was, and still is, to diversify the revenue base of the government beyond oil and oil related sources. Furthermore, both reports agreed on most of the fundamentals required to achieve that objective. Under the auspices of the Open Society Initiative, the reports of the two Groups were further exposed to a wide range of stakeholders including but not limited to tax consultants, the IMF Mission on Tax Administration, the Federal Ministry of Finance, the Economic Management Team, and the Management of the Federal Inland Revenue Service. Stakeholder inputs, where appropriate, were incorporated into the tax reform document and by August 2004, the Federal Inland Revenue Service had distilled a roadmap for the implementation of the reforms. At the Extraordinary Session of the Federal Executive Council Meeting held on 18 October 2004, the Executive Chairman of the Federal Inland Revenue Service outlined the reform agenda to the Federal Executive Council. The Council identified three broad, critical strategies required to implement the harmonized tax reform agenda. These were autonomy for the Federal Inland Revenue Service; increased funding FIRS Handbook on Reforms in the Tax System for the Service; and amendment to the various tax laws. The Council therefore, approved that the Service should be granted autonomy in the areas of recruitment, funding and remuneration. A four percent cost of collection of non-oil taxes (which was subsequently codified in the FIRS Establishment Act 2007) was also approved and provided for in the 2005 Appropriation Bill. Finally, the Council constituted a Presidential Technical Committee under the chairmanship of the Attorney General of the Federation to draft:
a. Executive bills that would give effect to the legislative changes required to actualize the reform objectives.
b. Enactment/Amendment of Tax Laws because some aspects of the reform agenda could not be implemented without tax legislative reforms.
While the original concept at the time of inaugurating the Presidential Technical Committee (PTC) was to come up with a bill that would address all the legal changes required; the Legal Sub-committee of the PTC in the course of its work determined that issues pertaining to tax administration should be addressed in a Bill establishing the Federal Inland Revenue Service while other issues should be addressed by amendments to existing legislations. Altogether, the Committee presented nine tax bills to the Federal Government. All the reports are in the custody of the Federal Ministry of Finance.
- SOME ACHIEVEMENTS UP TO AUGUST, 2015
The modernization efforts towards organizational process and structural reforms of FIRS with a view to enhancing effective and efficient tax administration have produced significant verifiable outcomes, prior to the emergence of Mr. Fowler as Executive Chairman, in the following areas:
a. Developing a tax reform agenda
b. Enactment/Amendment of Tax laws
c. National Tax Policy
d. Articulating a clear direction for the Service and the JTB
e. Improved Funding
f. Reengineering and Automation of Key Processes
g. Reorganization of the Service towards a modern tax authority
h. Job Creation
i. Career/Skill Development and FIRS Handbook on Reforms in the Tax System
j. Improved Remuneration/Welfare/Working Environment
k. Tax Audit
l. Tax Investigation
n. Tax Payer Education
o. Communication and Liaison
p. Dispute Resolution
q. Tax Refund System
r. Performance Management
s. Inter-Agency Collaboration
t. Gazetting of regulations/orders.
u. Development of harmonized Tax Reform Agenda with other tax authorities in Nigeria.
It must however be noted that the reform programme has repositioned FIRS for efficiency, cost-effectiveness and encouraged modern tax administration with a view to meeting global standards on tax administration system having identified the following problems associated with the dysfunctional nature of FIRS;
Unorganized structure and poor working environment of the Service.
Obsolete tax laws, policies and regulations governing the tax system.
Inefficient and ineffective tax administration.
Poor and inadequate staffing capacity.
Insufficient funding for operations, trainings and other cost of running the Service.
Lack of working infrastructures such as office space, office equipment, office furniture, internet service, and computer systems etc.
Other operational logistics such as official and operational vehicles, office utilities and stationeries, etc.
The above challenges were overcome as noted above as at August, 2015. Also, the functionality and organizational structure of FIRS were improved upon to reflect the global best practice by bringing tax administration closer to the taxpayers for their convenience. This was done with the introduction of the following administrative changes in FIRS:
One-stop-shop approach for all tax operational services,
Creation of offices of Coordinating Directors for effective supervision of various departments headed by directors/HODs,
Weekly management meetings to discuss strategic, tactical and operational issues, tax collection achievement and addressing concerns or shortcomings that might hinder progress.
Established a well-structured platform for expansionary meetings such as Operational Management Meeting (OMM) and Enlarged Management Meeting (EMM) where issues relating to collection performance and other tax matters would be discussed.
Recruitment exercise was transparently and publicly conducted and concluded starting in 2010 and 2012 wherein professionals with various excellent backgrounds were offered appointments to complement the efforts of the existing staff to drive her reform programme/agenda as it relates to tax administration in the country.
Commencement of e-tax administration platforms such as Integrated Tax Administration System (ITAS), Taxpayers Identification Number (TIN), etc.
- TAX COLLECTION PERFORMANCE – 2000-2018
With fixing of the fundamentals by building a foundational base that would readily enhance tax revenue collections through the implementation of the tax reform, we experienced a steady increase in tax revenues for the government except for the immaterial decrease in tax revenues which of course were attributed to 2007-2009 global credit crunch/financial meltdown, the performance before Mr. Fowler was growing year-on-year.
Contrary to Mr Fowler’s claim that “N5,320 trillion is the highest revenue ever generated by FIRS in history” is misleading and economical with the facts because:
(1). In 2012 the set revenue target was N3,635.5 trillion while N5,007.7 trillion was generated, with 137.74% of collection. But the set revenue target in 2018 is N6,747.0 trillion and actual revenue generated stood at N5,320.0 trillion with 78.85%.
(2). The amount of N5,007.7 trillion in Dollars in 2012 was $32,150 billion while the amount of N5,320.0 trillion in 2018 stood at $17,385.62 billion. This means FIRS under his watch did not meet the set target, its performance was also poor in Dollar terms in 2018. Below is the tax revenue collection performance from 2000-2018 for further clarification.
Our collection should continue to grow year-by-year as shown above and not decreasing as highlighted in red which represents FIRS performance under his watch as Executive Chairman. These clarifications are necessary to dispel the huge media propaganda stupendously sponsored with taxpayers’ money in many conventional (electronic and print) platforms all over the country to boost his personal ego.
The open secret remains that FIRS has under-performed under his leadership and this could be attributed to its executive incompetence and arrogance in handling tax administration matters.
It must also be emphasized that in 2010 when the general and transparent recruitment exercise was concluded, the ripple effect of the exercise and other initiatives embarked upon produced huge tax revenues as can be seen from the table above for 2010, 2011 and in 2012 when the tax revenues got to all-time high of N5.01trillion at an exchange rate of N155.76. So, it is no longer news that N5trillion revenue target is achievable provided a competent person is appointed as the Executive Chairman of FIRS.
- ABUSE/VIOLATION OF LAID DOWN PROCESSES AND PROCEDURES
It is sad that all the contributions made by former Executive Chairmen of FIRS to make it a global reference point as an effective and efficient tax administration system for other tax jurisdictions is speedily collapsing following the appointment of the current Executive Chairman in 2015.
One would have expected that his appointment would improve the hallmark achievements he met on ground but the reverse is the case. The first seven (7) months into his tenure as the chief executive of FIRS has led to series of abuse/violation of laid down processes and procedures, a fragrant disobedience to established rules, policies and laws, a total disrespect to the leadership in various Coordinating Groups, Departments and other positions within the Service and a total collapse of the entire system. The noble and professional institution (FIRS) which was left behind by his predecessors has completely been politicized, and has now become a Mecca or Jerusalem of some sorts to politicians and parasitic contractors.
This rascality was further heightened by the claim that the current vice president is his friend and a school mate and for this reason, he could abuse due process and get away with it. In saner climes, his relationship with the vice president must propel him to respect all known processes, procedures, laws and constituted authority while discharging his duties and responsibilities as a public officer who would be held accountable for his actions and inactions. Sadly enough, the reverse is the case in FIRS.
- ATROCITIES PERPETRATED BY MR. FOWLER IN FIRS
Dear Mr. President, there are so many disturbing atrocities perpetrated by Mr. Fowler in FIRS which your attention must have been drawn to but we wish to also draw it to you again, sir. There are convincing evidences already presented to you for further action and others that may be presented to you for further investigations and for his possible prosecution. We strongly advise that these atrocities be made known to the VICE PRESIDENT because it is his name that is being used a shield against investigation and prosecution for abusing his office.
It must be emphasized that Mr. Fowler’s era in FIRS has unimaginably taken it back to the old dark period of inefficient and ineffective days. Some of which include;
Corporate and institutional lies (untrue stories) about FIRS performance being perpetrated by Mr. Fowler. Examples include; N1.5 trillion announced to have been collected as tax revenue in the 1st Quarter, 2019. Whereas the sum of N1.07 trillion was the actual collection for the same period. Another example was that the tax audit cycle was reported to have been reduced from 90 days to 63 days. This is not true as there are many tax audit cases above 48months that are yet to be concluded in various tax audit review offices nationwide. Another lie was the issue of 5000 new taxpayers most of which are enterprises and road side merchants that have little or no contributions to FIRS tax revenue collections. These and many other lies have to be said by the FIRS Chairman with a view to keeping himself or his proxy in office for another term of four (4) years.
Extravagant weekly spending on concerts and parties in Lagos, Port Harcourt and other major cities within and outside Nigeria.
Frivolous donations to organizations while staff entitlements for official engagements would take a long time to settle. This is evident in the investigation currently on-going by EFCC where millions of naira of Duty Tour Allowance (DTA) were found in the accounts of the staff working directly with Mr. Fowler. FIRS staff are suspecting that the investigation will be compromised because of Fowler’s relationship with the VICE PRESIDENT and the EFCC Chairman.
Lack of organizational structure for effective performance. His commitment at ensuring that FIRS does not have a constitutionally recognized board since his appointment is a disservice to the organization and the country. This was deliberately allowed to happen. Recall that the last time FIRS had a Board was in April 2012. The absence of FIRS board has made Mr. Fowler, a 3-in-1 authorities i.e. the Executive Chairman, the Management and the FIRS Board. This has further fueled the executive arrogance being displayed by the Executive Chairman of FIRS for lack of checks and balances.
Restructuring of FIRS organogram to suit his personal aggrandizement. Some audit functions in the area of Oil and Gas, financial institutions, multinationals, telecommunications, constructions, aviation and special audit & investigative cases have been personalized by assigning them to inexperienced acquaintances he brought into the Service as staff and consultants without recourse to the due process.
Collapse of a functional regional structure into inactive state coordination while most of the state coordinators are his personal and political friends, he brought inexperienced people to occupy high and strategic positions in FIRS.
Outsourcing of core responsibilities of some departments such as Human Capital Management, ICT, Audit functions for personal gains and not for the interest of the Services.
Movement of ICT equipment to a private company premises, (Main-one Nigeria) in Lagos through a contract worth over N1.7 billion for the co-location. Note that Executive Chairman has no power to award contract of such magnitude.
Collapse of structured weekly meetings, OMM & EMM by making himself the sole management/decision maker for FIRS. He calls for meetings at his convenience even without prior notice to abuse, blame, mock and make all sorts of unprofessional and uncomplimentary remarks instead of using the platform to collectively address fundamental issues affecting the progress of the Service.
Suspension of tax audit and case investigation functions in various field offices since January, 2016 and the engagement of friends as FIRS consultants to carry out core tax functions of audit, investigations, taxpayers’ registrations and other ancillaries of the Service.
Indiscriminate Transfer of senior officers to non-existent offices and/or non-functional training schools nationwide.
Continuous employment of new people unilaterally without recourse to established rules, processes and procedures for recruitment exercise. There are no Staffing Needs Assessment carried out before recruiting the new staff. In 2019 alone, over 700 staff have been brought in illegally. Sometimes appointment letters are brought to Mr. Fowler to sign in the VIP waiting lounge at the airport.
Duplication and multiplicity of duties and responsibilities have become the order of the day in the Service.
His verbal pronouncement at any meeting or forum has now become a policy statement. This is indeed an unfortunate nightmare currently existing in FIRS.
Corruption has also become a phenomenon, a culture and a norm using all kinds of fronts in receiving gratifications from tax refund cases, contract awards, lien-on-accounts placement and even in employment.
Illegal placement of LIEN on taxpayers’ accounts without due process and other forms of touting approach to tax administration with impunity and recklessness.
Numerous threatening memos from the Office of the Executive Chairman to his staff that taxes must be collected at all cost failing which severe sanctions await them. Mr. Fowler should be properly informed and educated that THREAT does not collect taxes, but voluntary compliance, persuasion, right policies and enabling environment as evidenced in civilized economies would endear citizens and motivate staff to voluntarily perform their civic obligations and discharge their functions efficiently.
- CONCERNS OF STAKEHOLDERS
His actions in the Service have aggravated genuine concerns of stakeholders especially FIRS staff, taxpayers and the public with the way he is running the organization. Several petitions had been made to you, Mr President and the leadership of the National Assembly on issues of high-handedness, lopsided appointments and corruption charges. The level of engagements by staff vis-à-vis their job functions have significantly dropped as most core functions in FIRS have now been contracted out to friends and cronies.
The effect of his leadership style has undoubtedly affected and still affecting the image of the Service such that FIRS has now become the most litigious institution amongst MDAs in Nigeria.
From the foregoing, it is strongly believed and very clear that Mr. Fowler has shown crass incompetence, a corruption-personified Chairman who lacks leadership skills and sufficient knowledge of taxation to drive FIRS to the next level.
In view of this and for the immediate action for the integrity of the Service to be preserved, we humbly and respectfully pray that:
Mr. Babatunde Williams Fowler’s appointment as the ECFIRS must not be renewed and a new substantive chairman who is not an affiliate or friend of politicians, but a technocrat with excellent credentials of track records from within the FIRS be appointed forthwith to reset and re-build the Service.
The Board of FIRS should be constituted without further delay. The composition of FIRS Board with quality minds and other institutional members is very important to drive the strategic implementation and values of the Nigerian tax system.
It is strongly recommended that the activities of Mr. Fowler from the day he was appointed as the ECFIRS up to his last day in office should be investigated and be brought to book for all infractions he had committed while holding sway as the Executive Chairman of FIRS.
CONCERNED STAFF OF FIRS