Ayodele Subair, Executive Chairman, Lagos Internal Revenue Service (LIRS)

On improving tax collection

What measures have had the greatest impact on boosting tax revenues in Lagos?

AYODELE SUBAIR: There have been two major laws introduced which turned things around: the Lagos State Revenue Administration Law of 2006, and the Hotel Occupancy and Restaurant Consumption Law (HORCL). The first granted Lagos tax administration autonomy, so to speak, as before it used to fall under the Federal Ministry of Finance. This autonomy led to the creation of LIRS and enabled it to be run on a private business model, significantly reducing the amount of bureaucracy, and allowing us to strategise and formulate operational policies. It has permitted us a high level of independence concerning the acquisition of resources, especially human capital; which has allowed us to train personnel professionally, and we now have a highly skilled workforce. The HORCL lets the state government charge 5% tax on consumption in hotels, bars, event centres and restaurants. When the HORCL was passed in 2009, Lagos was generating an average of about N600m ($2.1m) in taxes per month; now we are generating around N25bn ($88.4m) per month. We are not where we want to be yet, but the collection for 2017 is expected to reach N30bn ($106m) per month.

What measures have been taken to further engage with Nigeria’s large informal sector?

SUBAIR: The informal sector is a largely untapped area, and the administration has been very proactive in trying to increase tax collection from it. The Directorate of Informal Sector and Special Duties was created, which together with a lead consultant is in charge of mobilising the informal sector and penetrating workers’ unions and associations in order to register tradesmen, artisans and union workers for tax purposes. Our tax education and enlightenment teams go out into markets and explain the need for tax payments. We have also translated the Personal Income Tax (Amendment) Act of 2011, and tax forms in Yoruba, Ibo, Hausa and pidgin English to improve connectivity with different communities across the state.
Through our programmes we have significantly increased communication and engagement with the general public, urging them to pay taxes, with positive results. Meanwhile, we have been able to show where this money is going thanks to the large number of visible projects and initiatives currently being undertaken in Lagos by our governor Akinwunmi Ambode. Another key component of our success is security. Stability and immediate security are major factors attracting economic activity in Lagos, as such, the state has been investing heavily in this sphere, which takes priority in funds allocated from the money collected through taxation. Security and political stability bring investment, both from inside and outside of the country.

How has the role of ICT services affected tax collection in recent years?

SUBAIR: The introduction of ICT has done a lot for the collection of taxes, as we now have an electronic database where we keep our data, which helps with financial monitoring and service delivery. Automation is also becoming important as we are engaging in a major data integration process with other agencies. We are making a big push in the area of consumption tax in 2017; we are going into a public-private partnership, which will allow us to monitor the payment of consumption taxes online, in real time. That is going to be a major milestone. We are going to have an electronic presence in every hotel, event centre, bar and restaurant in Lagos State, while having our data on the cloud means that at any point in time we can view all transactions happening in these places. Every receipt is going to have a unique ID, and every member of the public will be able to log in online and check whether receipts received are genuine or not. These receipts will also qualify as free entry tickets for raffle and lottery draws.