 Welcome back to the breakfast and plus TV Africa. We head straight to our first conversation where we look at the issue of tax evasion. Now Nigerians have actually witnessed a pattern of disturbing disregard for obeying financial obligations by government agencies and that's really really saddening. At a time where you see tax increase taxes and tariff not even minding COVID-19 and all of the hardship that Nigerians have to go through. Of course you have government agencies not obeying and doing the needful. That will be our conversation this morning. Of course we have an economist who will be making sense of all of this. We look at the implication for us as a country and the way forward we have Ken Ifair who is on standby. Now according to reports by the FIRS it says that we have actually lost 5.8 billion dollars to tax evasion by MDAs. Good morning Mr. Ken Ifair. It's good to have you join us. Hi. Good morning. Thank you for inviting me. All right sir. Let's start off. Let's share your thoughts. I'd like to ask you what your thoughts are on this particular issue. I mean talking about the fact that we have lost 5.8 billion dollars tax evasion by government agencies, ministries and departments. What are your thoughts on this? I think 5.8 billion dollars is an understatement because this practice is very pervasive across the ministries. Let alone the agencies. I mean I personally have experienced this some years ago, about seven years ago, where I think it's probably ministry of walks, no not walks, I think was power or something, where they deducted the utility tax and they never remitted that. So my company went to FIRS and FIRS looked at their portal and they didn't see the remittance. So my PR had to go back to get the receipt from the ministry and took it to the FIRS and still they didn't accept. I said what is your problem? This receipt is issued by a ministry. This is the evidence that I have to remitted the tax. You've actually taken the money and then you have, is it my problem that there has not gone into the start an investigation. Investigation they didn't start. Clearly they didn't give to the company and they stored the company because it's so fair that companies would be, would have to face the fact that they can't get tax clearance because somebody there has not remitted the money and then you don't call in the EFCC, you don't investigate this, you don't see it and then the name of the accounting officer that made the deduction was there. Call the person, take this up internally. It's so unfair for you to have punish a company because when you don't issue them the tax clearance you actually force them to pay the money again twice and then they can trade without their tax clearance. That is grossly unfair but it's a widespread practice. Thank you very much. This is quite disheartening to see that the Federal Internal Revenue Service goes hard on private businesses but the government ministries, departments and agencies allow to to go scot free for this long. Is it a case of the FIRS turning a blind eye or is it a case of just trying to make the business of government easy and not be a blockade to the smooth running of these ministries, departments and agencies of the federal government? Well the thing is that when a company complains to FIRS, the duty of FIRS to call into enforcement agencies or at least at the minimum interrogate the situation with the appropriate MDA but to leave it with, take it or leave it situation where you're asking a company to pay back the same money again because you didn't see it on your portal and you're looking at the evidence that you have paid the receipt given to him. It means that there's compliances between the FIRS and whoever else are involved in this and I have to tell you this that I don't think it is a standard practice for companies to do that as a matter of policy. I think it's more to do with the accounts people in the departments that may well be diverting this money to another account. So and this thing happens all the time, it's just that they're not taking it very seriously and whether they're not taking it very seriously and calling in the ICPC or EFCC, then it means that there's complicit between the parties involved in this. You know with non-cases where an account officer opens an account and keep on paying some money into those accounts and these are money that have been deducted and used to reflect on the FIRS portal and then who bears the brunt is the company that bears the brunt being forced to go and repay another money and then and go face the reality that he doesn't get his task there as to continue his business. Okay so this is not the first time like you have also mentioned where we have government agencies and you have all the persons not paying taxes or not remitting. At this particular point our focus is on you know government agencies now not remitting. At the time in 2018 we also remember reports saying the CBN was owing about 10 trillionare if I'm not mistaken. Now what is the implication of all of this where you have government agencies not remitting taxes? Well the thing is that it has serious economic implication because you are you are depriving companies their ability to trade that is very very unfair because you know that without your task clearance there's nowhere you can go. You can't tender for contracts anymore because you have to submit this one of the things that you have to submit and just one single payment or two lots of payments that have not been reflected they just simply refuse to give you your clearance. I think that's very very unfair and the repercussions on the private sector is just unbelievable because you suddenly bring it in a company activity to a stop. It doesn't all go well for the well for the health of our economy then of course the second one is that it's about integrity with where we see corruption we have to fight corruption where you fail to fight our report then there's complicity and we need to look into this it is just not acceptable and we will have this scale of problems going on in our system. Mr. Kenford it all sounds strange to you know the layman on the street to hear that government is owing government I mean it sounds strange and that government agencies ministries and departments actually pay tax. Since this is a government and it's a government problem you know you're looking at the National Assembly the House of Representatives the Senate ministries like the Ministry of Agriculture I mean sometime ago we heard that the federal government ministries are owing about 90 billion in electricity debts and is it not possible to have these these deducted at source so that we don't have some of these issues coming up is is that possible? I'm not sure it is possible because they make budgetary allocations for particular lines of expenditure and then you get the contract then they have to pay you it is at the point of payment for the contract that they make the deduction that deduction can not be foreseen because you know for you to deduct a source what the government can only deduct is revenue at source that is as you are receiving your revenue but when you are spending they have no way of knowing how many contracts you are going to pay the size of these contracts is at the point where you make the payment that you need to make the deduction and then making the deduction is one thing paying it is another thing this matter is not the same as government agencies owing electricity bill you know we're talking about criminal activity that certain money has been deducted and it's clearly against the law there are regulations against this is a criminal activity not the if you're not paying electricity bill then that's okay they can come and cut off electricity and then you'll fight it out but this is a criminal activity where you have criminal gangs that are making the deductions and channeling it to private accounts and that is what it sounds like I don't see that as a deliberate policy that the director general of an agency says look make sure you don't pay all the taxes all the withdrawing tax keep it and then we'll put it in the head and use it to do more and I'm not sure that is the point this is a criminal activity and individuals that have bound this should be persecuted so it's really you know very shocking and very saddening because at the end of the day we're looking at the fact that the fiscal responsibility act actually mandates that government agencies make this payment to the accounts but that's not happening and so for these violations are there penalties what kind of penalties and how do we now overcome this especially that it has to do with government so how do we overcome all of this non-remittance by government agencies well fiscal responsibility act actually deals more with the revenues according to different ministries the different departments sorry different agencies and there are over 200 of such agencies it is a primary revenue that they are targeting with the fiscal responsibility act 2007 and of course you can argue that those remittances of those things are primary revenues for FIRs you can actually argue that and they themselves will make a cut from the administration whereby and large the focus of the fiscal responsibility act 2007 is on the income and by the agencies that are assumed to be trading and generating stock loss so the law says before there's an administrative junction that says those promote a 50 percent of your turnover then the other the main law says you have to pay 80 percent of your operating stock loss filling which we can come and clamp down office of that content general will clamp down on your income and take 25 percent from source so you know those are the three ways that they are taking these monies but you can see these monies coming in for as primary income to these organizations depending on your status but the fact of the matter is this one that we are talking about is fraudulent activity by gangsters and all kinds of people so it needs to draw the attention of the law enforcement agencies to unlock this the headlines from the papers are using the word loss Mr. Kenifer are we to take it that these monies cannot be recovered I mean of course you've said that certain persons can go out they can be recovered because the receipts are there you can demand your receipt you see the thing is this who how do they find out that money was not limited is only when you come to FIRS demanding for task clearance they will say okay what's the name of the company they will go and check and they see all the all the all the things that have come in on this company in the in their portal and then when they see those and they will ask you to go and get your account you get your account your bank account they will also see some of the transactions and they start looking for a tax that was paid or who told him that that was paid in relation to those deductions and that's where they find out and they do nothing and that's that's the criminal side of it they do nothing you tell the person okay there's no evidence in the portal that you did get this deduction was made he said okay all right okay I'm coming he goes to the account department takes his his invoice to them say look you made this deduction I need a receipt for this in an even new is what they initially they will try and play you out tell you to come back next week come back next week the man is not there they will be doing all that until you persist and proceed they'll give you the receipt and then when they give you the receipt you go back to the FIRS and then they play another game either they talk to them or whatever and then nothing happens they still insist that you go and pay that money and that is where is the criminal enterprise so should we say that this is a case where we can just say that all hope is lost because government would have to you know remit and government is not remitting so it's like government cheating government and who then should correct the wrongs if government themselves are not doing the need for when you have to separate these things there are two separate things one is a failing to account the other one is just not complying with you know the what's wrong with somebody's yeah somebody electricity bureau if he hasn't got the money hasn't got the money if it's not in his budget that's not in his budget you can always have an arrangement for him to pay you know as a window or you know you submit to payment but that's a different thing when according to the law a certain deduction has been made it has to be paid to the appropriate authority if it doesn't have we have the sentence payroll where when they run IPPIS that's the payroll system when they run it on BVL they saw where 35 bank accounts were in the same name and that's an officer sitting in a in the account department having 35 account numbers and paying money people's money into the account is that are you going to blame the department you blame you look for the people who are doing this the government department doesn't have those bank accounts 35 bank accounts to pay people's living is individuals inside these accounts departments that are doing this uh in collusion so when you see this you take action you make appropriate so so who should take action because that's the question now the FIRS needs to take action because FIRS is the one demanding you to go and pay twice that once has come to public notice to their notice they have to take action so they are the ones to sort themselves out otherwise there's complicity and you don't come back to somebody who has paid tax and asking him to go and pay it again because some other colleague of you or somewhere has refused to pay it in or has diverted the money and the client goes back and gets a proper receipt to show that he has paid it and you do nothing except insist that he should go and pay it again twice you know who would you take this to Mr. Kenneth it's really disheartening to hear in a time when Nigerians are really groaning under the pressure of increased taxes and and levies and rates to hear that you know these taxes that they are paying are not finding their way back to the government account federal governments account i mean we're here in federal ministry of agriculture and real development federal college of freshwater fisheries technology i don't know how many people knew that existed we're here in agencies like the advertising practitioners council of Nigeria the national Nigerian civil aviation authority i mean how many people pay you know at the airports and all of that and all these airlines who are made to pay taxes you look at what we pay to fly in Nigeria as tax or money that goes to the government to know the airline there's quite a lot you look at the Nigerian communication satellite limited all these agencies are not remitting things like stamp duty value added tax and Nigerians are paying with holding tax and pay has to end deducted from awarded contracts now and who slept on the ball you know because you've mentioned the use of word collusion for instance you've talked about the federal internal revenue service we know that the auditor general's office was the one that has you know unveiled these are exposed to some Nigerians but who should pay if you're hearing that the house of reps and senate they're not also you know remitting the taxes who should be held accountable who should pay the person that you do not want to be heard i can't tell you is the person that has already paid that money that is the person from which you have deducted the money he should give him the benefit of the dollars because all that this company has to do is to provide the evidence that he has paid that tax that has been deducted from him and you should deal with the company and then refer the internal matter to wherever you want to refer it in the system so that should be a matter between a fire arrest and the appropriate agents but you must give credit you must give credit to the company from whom this deduction has been made so that they can go about their business but you can't hold them to ransom and then if you hold them to ransom it means that you're actually demanding bribe from them because it is totally unfair you can't be holding them to ransom when you've already provided a primer for safe evidence that this deduction has been made and once that evidence has been provided you should not check size the third party you should now refer this to an internal mechanism within the service for resolving this or getting the culprit or finding who is responsible but you cannot hold the public responsible and then punish the company for no good reason. We say one last one I mean the federal government really gave a lot of hope especially with the action coming from the vice president's office with the ease of presidential ease of doing business initiative and all that there seem to be sort of an upswing and an effort you know from the presidency particularly the office of the vice president to make businesses find it easier in terms of taxes remittances and generally the ease of doing business and what went wrong what happened? Well they tried actually because don't forget that they managed to move out 20 places in the in the rank and although they suspended all process anymore they worked by doing that but they tried they really really tried because this is part of multiple taxation but this is multiple taxation borrowing on criminality and that's the difference you know that you know the fact that they taxed in one state as your goods are crossing going to the sea port and taxing another state and taxing is different is different because there are different tax jurisdictions it's different from having tax and the evidence that this has not transmitted so that that's a different that is criminality the other one is not administrative like city and then that needs to be dealt with the other one is a criminal act it needs to be prosecuted okay so let's also stay with the fact that the auditor general the question here would be is it really doing enough we know that the constitution empowers him section 2 I mean 85s of section 2 of the 1999 constitution allows him to audit the accounts of you know all federal accounts and what have you do you think that he's doing enough because one would want to ask if that audit is being carried out you know currently and we're doing it efficiently we probably might not get to this point where we are now so I'd like to share your thought you think that the auditor general of the federation is doing enough I don't think you expect you should expect the auditor general to do any more than publish his report which he has done fiscal responsibility commission that is now according to the revision of the law FR A 2007 is going to be given prosecutorial power that means that where they detect fault in the in the accounting they will do an assessment and they start immediate legal action it's no longer right to report after the general office and then they send the report to the FCC and these people will go around and no those process are going to bump you know according to the new amendment but I can't expect that the FRC is going to get into this corner of non-remittance to an agency they are actually either doing if they're looking at accounts of FIRs is the accounts of FIRs it is not for them to go and look at what should enter into the accounts of FIRs so I wouldn't be expecting them to take any action or prosecute it is the FIR that should be doing this reporting this the least they would do is to contact the agency that was purported to have made this thing just to establish that the suspicion to them are not fake receipts they should establish that and if they establish that their satisfaction is fair enough if they don't they can make a report to to or ask the client to make a report to to the AFCC or ICPC or who said everyone is applicable but I think it's not fair that somebody who has legitimately allowed the detection of his transaction got a receipt to that effect and then you are not doing anything you have a duty you have a duty to pursue your collection or or don't turn around and then pass that book to the company that has already made his obligation so that is that's and that I can the only one I can think of is either there's a special tribunal set up by government to deal with this matter or just refer you to AFCC easy and if AFCC goes in they will all rock everything going on for years in that department especially the accounts department so you should get them in and when you do this for two people three people then everybody will learn and then they will stop the practice okay so do you also agree with those who are saying that the reason why we're going through what we're going through right now is because Niger has not adopted best practice technology as other paths of the world are doing so that we have people not evading tax no we have adopted a lot of technology if you look at the GIF MIS GIF first of all the TSA the treasure single account was useful because it started blocking government putting deposit with their bank and then go back and borrow money that deposit ends them zero interest and then they go back and borrow part of that money and be paying 15 percent interest I mean that was another kind of fraud so how do we now end this fraud I mean you are an economist how do we end this fraud so they thought that and then you now move because that's having some traction yeah having some traction a lot of traction in there because I've actually seen where one of the modules is saying is looking at when a contractor comes as just one project in the finance if they found out that the the amount of money being owed to government is almost equal to the amount of government is going people so I'm saying okay so if when you come to for payment they will just go and check your company status and then if you are claiming five billion they'll tell you are you know if you found out that you're owed us two billions can you settle that please and then you got settled it and then they pay you the balance three billion so that's beginning to work then you have the IPPIS which is the personal system and that personal system is also unlocking the the fraud the level the scale of the fraud especially when you run that over BVN and BVN is also helping the banking system helping everybody so so that the government is trying but these ones that are not heavily affected okay the CIS is constructed on their portal where all the payments will report but they're failing to clean their act because if you have obvious cases like this you should pursue those cases you know because you don't know what has happened when the officer has spoken to the person who would have issued the receipt you don't know what they have what they have talked about you don't know you know whether they did anything or did something and decide that they should get more money out of the company you don't know all right that's the much we can take at this point in time thank you so much Mr Kenifer for sharing your thoughts we do appreciate your time with us this morning and we look forward to speaking to you on this particular issue thank you all right mr Kenifer is an economist and we do appreciate his time we look up to you know we're hoping that we get to a point where there will be transparency in the system it's it's it's really shocking you know because a lot of Nigerians from the business and the private sectors are really struggling to pay their taxes and to just to be good Nigerians and to hear that government is so many government is is taking the money to the personal accounts it's it's really shouldn't be the case and I mean you want to say that this a person who should uphold the law absolutely and should do the right thing absolutely sad but um hoping that's always that we get to a point where we are very transparent and we're doing what is right and of course Nigerians would also emulate well we step on the brakes right now when we come through we head straight to our second conversation of course we'll be looking at the issue of the remembrance they're talking about the armed forces remembrance they and all of the activities surrounding it please stick around we'll be right back