With govt support, LIRS can generate over N5tn – Lawmaker

In this interview, the Lagos State House of Assembly member, Saad Olumoh, tells ARINZE NWAFOR some strategic measures that the Lagos Internal Revenue Service has been implementing to meet its revenue targets for the state, among other key developments

Briefly tell us about yourself

I represent Ajeromi/Ifelodun I at the Lagos State House of Assembly and I’m on the House Committee on Economic Planning and Budget. As the legislative arm of government, I work closely with the state government and the judiciary to ensure Lagos moves forward. This is why you can see Lagos co-enforcing almost everything.

What are the major economic achievements of this state government in the 2024 fiscal year and why?

The state government structured the THEME PLUS Agenda under Governor Babajide Olusola Sanwo-Olu’s second term. This agenda is built on transportation, infrastructural development, health, poverty alleviation, and education. We have worked seriously to ensure that this agenda comes out well for everyone in Lagos.

The state government is looking at infrastructural development. We have carried out some interventions in transportation, education, or subsidy which we call food palliative. In 2024, the House of Assembly was mindful of the leader of our party and President of the Federal Republic of Nigeria, Bola Tinubu administration’s policy – the Renewed Hope Agenda. The policy sought to structure the basis of what we are doing in this country as we cannot continue doing business in the usual manner or the country will be bankrupt. He came up with some policy changes, especially regarding fuel subsidy removal, deregulation of the foreign exchange markets, and many other things contributing to making Nigeria competitive globally.

President Tinubu’s policies affected individuals and the government. We had a lot of infrastructural projects, including roads and bridges that were under construction. As the prices of goods and services went up, the Lagos State House of Assembly managed the situation by being proactive in the budget to make adequate provisions for these projects so they were not abandoned. We made provisions despite the budget being pegged at N750 to a dollar. Everyone knows how high the dollar rose; almost soaring to N2,000 to a dollar. With the committee’s and the House of Assembly’s initiative, we could adequately provide over N100bn to cover this shock.

What are the effects of this intervention?

Today, I’m happy to say that we can all attest to the roads and bridges commissioned by the government. In addition to the physical road infrastructure, we have the Lagos State Health Management Agency, Lagos State Health Scheme, also known as Ilera Eko project. You might not be using it, but our people use that aid facility. Once you have that aid insurance, you can approach any hospital, especially a general hospital with the policy, to get treated. A lot of Lagosians are buying into that programme. We brought LASHMA on the first-line charge, meaning that the health sector must receive its money no matter what happens. This is telling for the health sector because a healthy nation will always achieve its best. This is why you see Lagos state moving forward.

We also offered food palliatives knowing these things would come up. The state government and the House (of Assembly) were prepared. We made adequate provisions in the Ministry of Agriculture’s budget and set up Sunday markets where Lagosians get food. Apart from the government’s palliative, the people were getting food items at a 25 per cent discount and in some cases, a 50 per cent discount. The Lagos State Government paid a 50 per cent subsidy for the blue buses in the transportation sector. We also (subsidised) the blue line by 50 per cent for every commuter. We carefully prepared for these things in the budget to handle the shock arising from the change in the Federal Government’s policy direction.

We prepared our response to the Compressed Natural Gas initiative by making enough budgetary provisions for the Ibile Oil and Gas Corporation. This was in addition to the Federal Government’s subsidy to ensure we move into that CNG initiative with less dependence on petrol and diesel fuel. We have had a seamless transition (to CNG) in Lagos State. Let me also bring you to what you call ‘Detty December’. Lagos State made over N60bn in December 2024 because we were secured and everything was looking right for us in Lagos. Lagos is very peaceful and anywhere there is peace the economy will develop. We have well-funded neighbourhood watchers. You will marvel at the intelligence they gather in the state and share with their sister security agencies. I will not go into that because it is about security.

How do you take care of your budget deficit?

Firstly, the budget is an estimate. When it comes to the House (of Assembly), we pass it into law. Although it becomes a law, everything in the budget is estimated. We will fully execute (the budget) if we get enough money; it is either that or we borrow. And that is the reason why we have a deficit. We had a supplementary budget last year. An additional N200bn went into last year’s budget as a grant from the Federal Government to support our red line. So debt is not a problem. Doing deficit financing is not a problem.

We use (the supplementary budget) to develop our infrastructure and not for mere consumption. We should encourage borrowing for things that generate economic activities so the state’s Gross Domestic Product rises or moves in the right direction. If you wait for tomorrow the prices will go up. So you need to take advantage of the opportunity cost. That is why even though we take a loan, (we ask) to know what it is meant for. We do not have any problem as we did not go beyond the accepted ratio.

The budget went up to approximately N3.4tn, but the question we should ask is why N3.4tn? We should discuss Mr Governor (Sanwo-Olu)’s intention to make Lagos State the best sub-national in Africa. Reforms in (generating) electricity have placed it under the concurrent list so states can regulate what happens in our electricity market. Unfortunately, the (electricity reform) law was not yet passed when the (previous year’s) budget was being put up. When the budget came into the House (of Assembly) Mr Governor signed it into law enabling the private sector to participate in our electricity market. It was to make the market competitive enough so we could have the power to drive our businesses. That was one of the reasons why the budget went up.

How would you rate the performance of the Lagos State Internal Revenue Service in recent years?

Professionals head the LIRS. They have the freedom to work as is seen from their financing. They have money to do their work because the cost of collection is more or less first-line. The House (of Assembly) ensures they get whatever they need to do their job. They are fantastic human beings, very focused and dedicated. They would ask, ‘Honourable, we need this, we need that’  and we give them whatever they ask during the budget session. They have changed from where they used to be in Good Shepherd’s House and are in the Revenue House. Visit the place and you would like to pay your taxes. It is a fantastic place with the office ambience and the lights. Apart from having professionals, the office environment is fantastic.

There is also support from other arms of government working for them. Mr Governor has always been there and the leadership of the House of Assembly has always been around to support them. Regarding the issue of computerisation, most of the LIRS’ businesses run on autopilot. You need human elements, but they are well-computerised. I can’t say they have a 100 per cent of everything they need to function effectively but they have a substantial amount. That is why you see the results from that organisation. We have always supported them with whatever they want and whenever so they can reasonably drive the revenue of Lagos State without making life difficult for Lagosians.

How is the House of Assembly helping the LIRS perform better?

I represented the leadership of the House at this year’s budget signing ceremony where I told Mr Governor that Lagos State has, for the first time, crossed the mark in terms of excellence. Yet, I believe they can do more. I pleaded with Mr Governor to ensure that we encourage them to do more. Because the more they do, the less we depend on them. Lagos State can achieve an Internally Generated Revenue of over N5tn. One cannot talk about that without noting that some areas have not been touched (in revenue collection). The (LIRS) Chairman Ayodele Subair has done well by crossing that mark. It is only (during) budget (talks) that we have a serious interaction with them and whatever they ask for we try to support. When we carry out oversight functions on them we also ensure we encourage them in any areas they are lacking.

The growth trajectory of the LIRS in the last five years has been very steady. They have been meeting and moving up on almost all their revenue ends. In this 2025 budget, we gave them (a target of) N1.4tn and I believe they will surpass it. As I said earlier, LIRS can (generate) more than N4tn for us in this state. At the same time, we still achieve as much as we have targeted. Although it is still subject to litigation, but the Joint Tax Board, especially with the new tax reform from the federal level, is going to place things in the proper perspective. There is no intention in terms of fiscal policy that will be meant to hurt Nigerians. It is just a matter of a change of attitude or perception. Our target of N1.4tn is not going to have (a damaging) effect.

Lagos’ economy is booming. When more jobs are created, you have more people that come under the tax net. Because once you pay your salaries to your employees, they will pay their taxes and that is how these things multiply in bits and become the N1.4tn trillion. I do not see us going into such a situation whereby Lagosians would feel intimidated because they want to pay taxes. (Employers) will always pay (their workers’) taxes from their salary. It is deductible. I do not see such things happening to us.

How can you bring people in the informal sector into the tax bracket?

The tax reform law being debated at the National Assembly is speaking to this. Some levels of business will be exempted from paying taxes when it takes effect. As you must know regarding the reforms, you will not pay tax if your starting turnover is less than N25m. I do not see us driving our revenue by punishing or trying to intimidate or victimise the people. Have you seen Lagosians go on the streets to say they are paying (the government) taxes they do not want to pay? So, It is a broad process and we need to work harder to comb those areas. We will hold them responsible in such a way that they contribute to the growth of the state.

What does LIRS do exceptionally to raise Lagos’ revenue profile which other states are not doing?

Ayodele Subair can tell you what he’s doing differently. Other states are struggling, depending so much on the Federal Government. I mentioned we have professionals running that place (LIRS) with the right tools to work. You need to visit the head office; go to the Revenue House and see whether you would like to pay your taxes. They have the ambience, the professionalism, everything that you need to have in the business. No bureaucracy stops them from doing what they need to do. So that’s one thing that any other state should learn. Let them work freely. There are some times when you can come in but allow them to do their job. By the time they give somebody a bill, say it is the state governor, he does not say, ‘Why would you give me N1m when I am the governor? He pays his fair share of taxes. When they give me my bill I pay.

The problem in Nigeria is the issue of a national database that investors can look at. What do we expect this year in terms of a thorough, sustainable and dependable database system that investors can look at?

I can tell you that Mr. Governor (Sanwo-Olu) has done so well. Again, I want to come to professionalism. The way the state is run, we are professionals. Some of us are professional politicians. We are professionals in politics. Looking at us from the outside, you think, who is this person? But if you dig deep into us, you find that some of us hold doctorate degrees. Some of us have worked in the banking sector before coming to serve and we understand the governance process. Also, Lagos State is a smart city. What we do is driven by data. The Ministry of Science and Technology has partnerships with the private sector that ensure that all our data, apart from the one that is being mined primarily, the secondary ones are kept in such a way that (it can be accessible to) investors.

We also have the office of the Public-Private Partnership. I was the immediate past chairman of the House Committee on Public-Private Partnership. So I know what I’m talking about. What we have done is to encourage investors to come to Lagos because one, there is security and peace. We always meet them in their time of need, in terms of giving access to land. Take a look at the LagRide car that we are using. They are assembled in Lagos; in partnership with Lagos State, they are not imported as cars.