Agora Policy: FIRS’ N43bn cost of collection commission surpassed each state’s FAAC allocation in January

Agora Policy, an Abuja-based think tank, says the N43 billion cost of collection received by the Federal Inland Revenue Service (FIRS) in January exceeded what each state got from the Federal Account Allocation Committee (FAAC) revenue.

The think tank made this known in its report titled ‘Why Nigeria’s Cost-of-Collection Approach is no Longer Tenable’ on Monday.

According to Agora Policy, the argument for centrally collecting taxes and revenues is sound but transforming federal agencies into the federation’s commission agents presents numerous problems.

The think tank said the cost-of-collection approach to rewarding and funding such agencies might have been useful at some point but recent developments show that it is a flawed idea. 

According to the firm, the approach has become unsustainable due to its potential for abuse, distortion, distraction, and wasteful expenditures, as its utility has been overtaken.

“A review of the fully disaggregated data on FAAC disbursements, as published by the National Bureau of Statistics (NBS), highlights some of the incongruities that the arrangement has created,” Agora Policy said.

“For example, in January 2024, FIRS received N43.35bn as cost of collection. None of the 36 states of the Federation received up to this amount as Federation allocation.

“The state with the highest gross allocation for the month, Delta State, got N39.59bn, which means that FIRS not only received an amount more than what each of all the 36 states but also got 109.49% of the allocation of the state with the highest gross allocation.”

According to Agora Policy, the Nigeria Customs Service (NCS) received N16.27 billion — the lowest cost of collection for the month.

However, Agora Policy said what customs got was higher than what each of the 36 states received as gross allocation for the month.