Of post Covid-19 IGR architecture

Bicci Alli

 

Sir: The Covid-19 pandemic has impacted severely on governance and administration at federal and state levels. Federalism as entrenched in the constitution is being practiced partially to the benefits of all and sundry.

In the fight against Covid-19, federal government’s role has been limited to providing general guidelines and supports while governors adopt strategies best suited for their states without rancour.

State governments are in the forefront of fighting the pandemic within their states, increasing resources for public health, imposing various forms of curfews and lockdowns resulting in closure of schools, religious places, markets, businesses.

As states relax curfews, lockdowns and open for business, governors will have to come up with means of generating sustainable revenue to meet ever increasing demand for non-revenue generating social services.

Unbudgeted but substantial investment in health sector across the states is the order of the day.

Methods and means of conducting government businesses have to be re-modelled against the background of physical distancing. Considerable resources must also be deployed in enforcing public health laws and regulations.

However, drop in prices of crude oil, has resulted in reduction in allocation from the federation accounts to states. Staff layoffs, decrease in salaries and income also impact negatively on Personal Income tax which forms the bulk of most states’ IGR.

With drastic reduction in revenue, the temptation might be to borrow to finance budget and embark on aggressive tax collection.

At this time, it’s going to be very difficult for states to raise needed finance through borrowings. Likewise, taxpayers will resist any form of aggressive tax collection.

This is the time government is expected to show empathy and support businesses to weather the storm.

The pandemic provides opportunity for governors to build sustainable revenue architecture for their states. It is a known fact that 90% of states depend on allocation from the federation accounts to the tune 85% to finance their budget.

One of the principal reasons for this pathetic situation is the disconnect between the government and taxpayers.  To survive the winter, government must build on the good will occasioned by their proactive management of Covid-19, sustain connection with public at large and adopt same template and energy used in dealing with Covid 19 pandemic in the IGR drive.

Revenue process and management should be in the hands of tested professionals with proven records. Revenue leakages must be blocked immediately.

As IGR incident managers, governors must continually engage the populace on the need to pay taxes and take full ownership of IGR process.

Covid 19 pandemic has demonstrated beyond any doubt the importance of government.  Our governors must also ride on the goodwill and positive public perception to demand for payment of taxes as sustainable means of financing quality public service delivery.

It must be emphasised that this is not the time to increase tax rate or introduce new taxes.

 

• Bicci Alli, Lagos.