APPRAISAL OF THE CONTRIBUTIONS OF TSA (TREASURY SINGLE ACCOUNT) IN BOOSTING TAX REVENUE IN NIGERIA
1.1 BACKGROUND TO THE STUDY
Revenue generation by Nigeria governments is partly derived from tax. Tax is a compulsory levy imposed by government on individuals and companies for the various legitimate function of the state (Olaoye, 2008). Tax is a necessary ingredient for civilization. The history of man has shown that man has to pay tax in one form or the other that is either in cash or in kind, initially to his chieftain and later on a form of organized government (Ojo, 2003). No system or rules can be effective whether foreign or nature unless it enjoys some measures of financial independence. It is important to note that successive governments in Nigeria has adopted several policies in managing revenue in the nation, one of which is the Treasury Single Account TSA that was recently revived and implemented by President MuhamaduBuhari. The effectiveness of the policy commenced through the Federal Government’s directive to all revenue – generating agencies to shutdown their accounts with commercial banks.
The adoption of Treasury Single Account for e-collection of Government Receipts for all Federal Ministries, Agencies and Departments (MDAs) is to aid transparency and facilitate compliance with section 80 and 162 of the constitution of the Federal Republic of Nigeria 1999 (as amended), all receipts due to the Federal Government or any of her agencies will be paid into the single account where it can be properly monitored. The researcher is however curious of determining the contributions of this policy in boosting tax revenue in Nigeria.
Series of treasury reforms began in Nigeria in 2012 with the aim of ensuring transparency and accountability in the management of the nation’s finances. This led to the introduction of the new Electronic Revenue Collection (ERC) platform. This is also targeted at improving internally generated revenue in the face of declining oil prices.
Until the introduction of TSA in Nigeria, MDA's which generate revenue, have the multiplicity of accounts in commercial banks, use part of the revenue generated to fund their operations and then remit the surplus to the federation account. As a result, agencies pay into government account what they deem fit. Under this situation, some ministries became richer than a government. The result of this situation includes leakages of funds, embezzlement of public funds, and inability of government to know the exact amount in its account. Budgets were therefore prepared using false projection leading to poor implementation. However, the greatest beneficiaries of this situation were the banks that relied on the deposits from the ministries (public money) and government borrowings from banks with high- interest rate. Above all, banks no longer care to mobilize money from other sectors of the economy. The balances of account of the government with the banks lay idle in the banks. All these stunted the growth of the economy. The above background resulted in the recent demand by the Presidency that all agencies and ministries should close their accounts with Commercial banks and transfer the balances into federation account with Central Bank of Nigeria. This directive conveyed in a CBN circular no. BPS/CSO/CON/DIR/01/079.Dated: February 25, 2015, and addressed to all Deposit Money Banks (DMB). The circular was entitled "Commencement of federal government's independent revenue e collection scheme under the single treasury account (TSA) initiative".
IMF (2010), defined TSA as a” unified structure of government bank accounts that gives a consolidated view of government cash resources. Based on this principle and the unity of treasury, a TSA is a bank account or a set of linked accounts through which the government transacts all its receipts and payments”. Adeolum, (2015) added that “the maintenance of Treasury Single Account will help to ensure proper cash management by eliminating idle funds usually left with different commercial banks and in a way enhance reconciliation of revenue collection and payment”. However, the researcher is of the opinion that the implementation of TSA in Nigeria will have effect on the internally generated revenue particularly the tax revenue in Nigeria by enhancing accountability and transparency in the system.
1.2 STATEMENT OF THE PROBLEM
The serious decline in price of oil in recent years has led to a decrease in the funds available for distribution to the Federal and State Governments. The need for state and local governments to generate adequate revenue from internal sources has therefore become a matter of extreme urgency and importance. This need underscores the eagerness on the part of state and local governments and even the federal government to look for new sources of revenue or to become aggressive and innovative in the mode of collecting revenue from existing sources. Aguolu (2004), states that though taxation may not be the most important source of revenue to the government in terms of the magnitude of revenue derivable from taxation, however, taxation is the most important source of revenue to the government, from the point of view of certainty, and consistency of taxation. There arise the needs to set up a proper management system that can encourage boost in tax revenue. Tax revenues are paid through Remitta into the Single government account in Central bank of Nigeria on a daily basis to ensure transparency and accountability. The researcher is however curious of determining the contributions of treasury single account in boosting tax revenue in Nigeria.
1.3 OBJECTIVES OF THE STUDY
The general objective of this study is to analyze the contributions of treasury single account TSA in boosting tax revenue in Nigeria while the following are the specific objectives:
- To examine the contributions of treasury single account TSA in boosting tax revenue in Nigeria.
- To examine the contributions of treasury single account TSA in managing tax revenue in Nigeria.
- To determine the advantages and disadvantages of the implementation of treasury single account TSA in Nigeria.
1.4 RESEARCH QUESTIONS
- What are the contributions of treasury single account TSA in boosting tax revenue in Nigeria?
- What are the contributions of treasury single account TSA in managing tax revenue in Nigeria?
- What are the advantages and disadvantages of the implementation of treasury single account TSA in Nigeria?
HO: There is no significant relationship between treasury single account TSA and tax revenue in Nigeria
HA: There is significant relationship between treasury single account TSA and tax revenue in Nigeria
1.6 SIGNIFICANCE OF THE STUDY
The following are the significance of this study:
- Outcome of this study will educate financial managers and the general public on the contributions of treasury single account TSA in boosting tax revenue in Nigeria.
- This research will be a contribution to the body of literature in the area of the contributions of treasury single account TSA in boosting tax revenue in Nigeria, thereby constituting the empirical literature for future research in the subject area.
1.7 SCOPE/LIMITATIONS OF THE STUDY
This study will cover the effect of the implementation of treasury single account TSA in Nigeria on tax revenue.
LIMITATION OF STUDY
Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
1.8 DEFINITION OF TERMS
Revenue: a state's annual income from which public expenses are met.
Tax: a compulsory contribution to state revenue, levied by the government on workers' income and business profits or added to the cost of some goods, services, and transactions.
Accountability: The obligation of an individual or organization to account for its activities, accept responsibility for them, and to disclose the results in a transparent manner.
Transparency: honest and open, not secretive
Adeolu I. A. (2016). Understanding The Treasury Single Account (TSA) System - Things You Should Know. [(2010), Treasury]
CBN (2015) "Revised Guidelines for compliance with Treasury Single Account by Banks in Nigeria,
Olaoye .A. (2015), How Treasury Single Account (TSA) may affect economy. (Unpublished Paper)
Kanu&Oyims. (2015). Financial Exclusion of Small and Medium Enterprise and Poverty Alleviation: Nigeria Experience. Archives' of'Business'Research,'3(4), pg. 63-77
Ojo T. (2003), Does The New Treasury Single Account (TSA) Hold For Tax? PWC Nigeria.
UdomaUdoUdoma (2015), Implementation of TSA and Nigeria Economy.Chairman National Planning Commission. Nigeria. (Unpublished Paper)