By Moses Adeniyi
The discourse over the necessity of internally generated revenue (IGR) for State Authorities to fund their budgets has been on the top burner in Nigeria. The subject remains a nucleus in the debate on the necessity of restructuring for States to assume the position of economic buoyancy for virility to propel development. Among all States in the Federation, the place of Lagos as the largest generating revenue State remains a locus classicus as the leading subnational government funding strategic percentage of its enormous budget, the largest among State Governments, through IGR. Giving consideration to this positioning status demands the perusal of the performance of the Agency responsible for administration of the State’s internally generated revenue.
The Lagos State Internally Revenue Service (LIRS) is the major funding arm of the Lagos State Government charged with the responsibility of collecting taxes and other revenues. Over the years, LIRS has increased the State’s Internally Generated Revenue (IGR) by executing various pioneering programmes and implementing strategies profiled to have positively impacted revenue generation and collection.
On December 31,2021 eve to the New Year, Governor Babajide Sanwo-Olu, the Lagos State Chief Executive Officer, signed into effect for implementation, the 2022 budget passed by the State’s House of Assembly after scrutiny. The budget assented to by the Governor was a cumulative of N1,758,196,646,844.00.
Recall that the Appropriation Bill, christened ‘Budget of Consolidation’ of N1.388 trillion naira, was on Wednesday 24th November 2021, presented to the State’s House of Assembly. The Assembly had in the version presented to the Executive increased the budget size from the initial N1.38 trillion presented before it by Governor, Sanwo-Olu, to N1.758 trillion. The breakdown shows the estimate comprises of N1, 166, 915, 843, 358 as capital expenditure and N591, 280, 803, 486 for recurrent expenditure. In other words, the capital to recurrent ratio is 66:34.
It was observed that the difference between the budget amount presented by the Executive and the final amount passed by the Legislature is largely accounted for by the decision to further accelerate already existing infrastructure projects and bring them to substantial levels of completion. Now captured in the Budget, is the financing to be deployed towards the Blue Line and the Red Line rail projects by private sector consortia, up to a level that will not put pressure on cash flow and debt sustainability.
The role of the LIRS to the implementation and performance of the signed budget remains central. The contribution of the Agency to the performance of the 2021 Budget was remarkably considered critical to the financing of the budget with IGR meeting up the demands to finance key projects. It was observed that despite challenges occasioned during the year in the first Quarter of 2021, the Internally Generated Revenue (IGR) raked in by the Agency stood at N128.2bn, about 28% higher than the IGR in the corresponding quarter of 2020, which stood at N100.3bn.
In Q2 2021, the State’s revenue recorded a performance of 76% of the projected target for the quarter, while in the third Quarter, Q3 2021, the total revenue accrued amounted to 78% of projection.
The inclusion of strategic projects throughout the 377 wards across the State in 2021, which aligns with the State’s mission to eradicate poverty was observed to be tied to upward revenue generation without which funding same would have appeared non feasible. The balance of sustainability obtainable from the forward consistency of the LIRS in the growth of IGR over time has placed the Agency as a cynosure of imitation for other Internal generating agencies in the Federation.
The consistency of the Agency has thereby been making Lagos State less dependent and strategically placed at a vantage beyond the shore of depending on proceeds from the Federation Account/Federal Allocation as the modus operandi of majority of the States in the Federation; a norm that has left development in the Country within the corridor of uneven growth. As argued, the coordinated efforts of robust IGR by Lagos State Government to fund significant projects for socio-economic development, sustains Lagos as a leading light for other States to follow in the quest for pressing needs for socio-economic development.
As Lagos State gravitate towards the dreams of a mega city, the place of LIRS as the major funding arm of the state government remains sacrosanct for functional structures of revenue collection within the most rational schemes at the least cost and warmth provisions for the private sector.
The launch of the service charter, a social pact between LIRS and the taxpaying public, was among strategic development giving reflection to the relevance of corporate social responsibility with the ambience of business friendly environment. It would be recalled that the Executive Chairman, LIRS, Mr Ayodele Subair, had upon the unveiling, disclosed that the service charter serves as LIRS’ commitment to enhancing effective and efficient customer-friendly service delivery on a continuous basis. He remarked that it comes as part of the Lagos State government’s policy to improve the ease of doing business in the state.
In a statement, the LIRS had said it is one of the 14 Ministries, Departments and Agencies approved by the office of the Governor of Lagos State to develop and launch a service charter for quality service delivery to Lagosians. Subair had said: “Over the years, LIRS has built a customer service culture that strengthens the partnership between LIRS, taxpayers and other stakeholders for the benefit of all parties.” According to him, as a key factor to ensuring the development and success of its charter, LIRS had been working closely with the Lagos State Office of Transformation, Creativity and Innovation and in consultation with other stakeholders. The chairman had said the agency was committed to continuously looking for ways to improve customer engagement and service.
Interventions such as the Implementation of Tax Incentives and Reliefs for Taxpayers [Individuals and Businesses] in Lagos State following the outbreak of Covid-19 pandemic among several measures to mitigate its impact on taxpayers and to ensure business continuity have been considered fitting to the configuration of social intervention with responsive reflections to building a good ambience for business to thrive.
In May, the State’s Commissioner for Finance, Dr. Rabiu Olowo had while giving account of the State’s Revenue performance said: “The Lagos State financing strategy by design is anchored on sustainable internally generated revenue model. This was steadfastly pursued and sustained during this reporting year as the State recorded impressive and improved revenue growth despite the Covid19 challenges.
“Efforts will not be spared to encourage and ensure that other revenue-generating agencies of Government perform at their optimum so that all the ongoing projects of Government can be successfully prosecuted and completed as far as possible. The State Government shall continually focus more on Internally Generated Revenue (IGR) by consolidating on our taxation sources as earlier noted.
“Government despite the adverse effect of the Corona Virus (Covid-19) Pandemic. The Ministry of Finance as part of its ministerial responsibilities provides various financial strategies to enable the State Government to deliver high-impact infrastructura projects envisaged in the Budget.
“It is pertinent to mention that the State Government achieved 88% Budget performance in Y2020. With all modesty, this level of performance is unparalleled by any Government in the country, be it State or Federal.”
The Agency remains central to providing Citizens of Lagos State with state-of-the-art infrastructures, essential social amenities and an enabling business environment through collaborative, people-friendly tax programmes and reforms.
As the State projects a target of one million additional tax-payers yearly, the LIRS as a significant stakeholder remains at the fore front for the State’s administration of collections.