The Federal Government says it has paid back state governments N98.3 billion tax liabilities owed them by Nigerian universities’ lecturers under the pay as you earn (PAYE) tax system.
The Accountant-General of the Federation, Ahmed Idris, said the settlement followed claims by state governments of underpayment of tax by the institutions.
Following reports of underpayment of PAYE taxes by tertiary institutions, Mr Idris said the Federal Government advised all the 36 state governments and the Federal Capital Territory Administration to submit their requests for reimbursement.
“It is important to note that all states governments of the federation made claims on the federal government to pay the differential arising from underpayment of tax by these institutions.
“The federal government has paid several billions on behalf of these institutions because of their underpayment of PAYE Tax. The aggregate figure of settled PAYE liabilities for the universities is N98.283 billion,” the Accountant General said in an advertorial on Thursday.
Mr Idris was reacting to recent reports by the Academic Staff Union of Universities (ASUU) that the government, through the Office of the Accountant-General of the Federation (OAGF), was overtaxing them.
The OAGF said its attention was drawn to series of reports by tertiary institutions unions, led by ASUU, that the Integrated Personnel Payroll System (IPPIS) was making huge deductions from their salaries and allowances to the extent that their take-home was reduced to 50 per cent or less of their earnings.
In his clarification, the Accountant-General noted that PAYE tax is compulsory for all salary earners in the federal public service.
In computing the tax deductible from the salaries and allowances of the university lecturers, Mr Idris said the IPPIS complied with Section 34 of the 6th schedule on Personal Income Tax (Amendment) Act of 2011.
He said prior to migration to the IPPIS payment platform, university lecturers underpaid PAYE tax as a result of the application of the wrong rate for the deduction.
Mr Idris said the unions had demanded from the Federal Government their exemption from certain tax payments under the IPPIS.
He said the request by unions amounted to an attempt to “formalise tax evasion through IPPIS” and was “not only untenable, but also unpatriotic request to violate extant laws on tax.”
Another deduction the university lecturers have been contesting is the 2.5 per cent of basic salary for the National Housing Fund (NHF).
Mr Idris explained that this was not only another statutory contribution backed by the Act of the National Assembly, but also savings by all federal employees to enable them have access to short life loans to own their personal houses.
“These savings contributions are refundable with interest either at retirement by the university lecturers or at their exit from public service as Federal Government employees.
“The request that those laws should not be applicable to ASUU members and therefore should be exempted, or be made optional for them is a breach of the Act of Parliament and not within the ambit of the IPPIS or the (OAGF).”
To meet their request, Mr Idris said the OAGF has already advised ASUU to approach the National Assembly to seek the amendment of the relevant Act on the issue.
On the 7.5% Employees’ Pension Contribution deductions, which ASUU has also frowned at, Mr Idris faulted the Union’s claim that it should be based on the basic salary of their members and not on consolidated salary.
“The consolidated salary is what is applicable in the computation of Federal employees’ taxes by the Salaries Income and Wages Commission (SIWC) to determine their contribution as consolidated salary.”
He said the actual amount contributed by the employees determines what the government contributes as well.
On payment of allowances, Mr Idris said this was based on the salary structure as approved by SIWC, the agency authorised by law to prescribe salary structure and issue circulars for all federal government employees in Nigeria.
The other agency charged with that responsibility is the Revenue Mobilization, Allocation and Fiscal Commission (RMAFC) authorised by law to issue circulars on payment of salary and allowances to political officeholders.
“Any other salaries and allowances approved by any other agency of government in Nigeria not formalized by these two agencies will amount to illegal payment,” the Accountant-General said.