HomeBusinessNigeria’s revenue crisis: New tax boss vows to boost collection

Nigeria’s revenue crisis: New tax boss vows to boost collection

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Nigeria is facing a severe revenue crisis that threatens its economic stability and public services, according to the new head of the Federal Inland Revenue Service (FIRS), Dr Zacch Adedeji.

Adedeji, who took over from his predecessor Muhammad Nami on Tuesday, said that the government spent 96 per cent of its revenue on debt servicing last year, leaving little room for development and social welfare1.

He said that the situation was unsustainable and required urgent actions to increase the government’s income from taxes and other sources.

“We are in a revenue crisis, government revenue is low amid a huge public debt2. Last year, 96 per cent of government revenue went into debt servicing,” he said3.

“Where debt has grown bigger than the Gross Domestic Product, GDP, and debt servicing faster than revenue, immediate actions have to be taken to remedy the situation.”4

Adedeji said that he would key into the reforms being initiated by President Bola Tinubu, who has set up a Presidential Fiscal Policy and Tax Reforms Committee to design and implement effective fiscal and tax policies for economic prosperity5.

He also said that he would embrace technology, innovation and creativity to improve the efficiency and effectiveness of the FIRS, which is responsible for administering, assessing, collecting and enforcing taxes and levies in the country6.

He pledged to eliminate leakages in the system, strengthen internal processes and controls, and foster coordination and collaboration among staff and stakeholders.

He added that he would stimulate voluntary compliance among taxpayers by engaging and educating them on their obligations and rights, as well as building trust and confidence in the tax system7.

“We need to innovate and build our operations on foolproof technology, while also evolving a hub of fresh ideas and creativity,” he said8.

“We must definitely plug leakages9. We need to strengthen our internal processes and control mechanisms10. We must put a high premium on effective coordination of assigned tasks and delegated responsibilities.”11

“We intend to come up with a menu of strategies that will stimulate voluntary payment of taxes and levies12. Yes, this is achievable because Nigerians acknowledge the need for the government to increase its revenue to be able to meet its obligations to them.”13

Adedeji also charged his staff to work with integrity, professionalism, fairness and exemplary public service, while upholding taxpayers’ confidentiality14.

He commended his predecessor Nami for his achievements during his tenure, which saw the FIRS surpass its revenue targets in 2022 and 2023.

Nami disclosed that the FIRS had collected N8.5 trillion ($20.6 billion) as of mid-September this year, exceeding its target of N12 trillion ($29.1 billion)15.

He also said that he had assessed and recovered another N4 trillion ($9.7 billion) from the Nigerian National Petroleum Company Limited (NNPCL), the state-owned oil firm16.

He said that he had surpassed his 10 per cent tax-to-GDP target of four years, having achieved 10.86 per cent in two years17.

He expressed confidence that the 18 per cent target in four years set by the current administration was not only achievable but could be surpassed18.

Nigeria’s tax-to-GDP ratio is one of the lowest in the world, according to the World Bank, which estimates it at 6.1 per cent in 2019.

The global average is 14.9 per cent, while the average for sub-Saharan Africa is 16.5 per cent.

Experts have urged Nigeria to diversify its revenue sources away from oil, which accounts for about half of its income but is subject to volatility and uncertainty.

They have also called for reforms in the tax system to broaden the tax base, improve compliance, reduce evasion and corruption, and enhance equity and fairness.

Adedeji said that he was optimistic that Nigeria could overcome its revenue challenges with collective efforts and commitment from all stakeholders.

He said that he was ready to work with the government, the private sector, civil society and international partners to achieve a sustainable fiscal future for Nigeria.

“I am confident that with God on our side and with our collective efforts, we will overcome our revenue challenges and build a prosperous nation for ourselves and generations yet unborn,” he said.

Source: Vanguard

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