The Senate, through its Finance Committee, has made a significant push for the Federal Inland Revenue Service (FIRS) to aim for an ambitious tax revenue goal of N30 trillion in 2024.
This call to action was accompanied by a critical review of the current tax waiver policies, which, according to the Senate, have led to a considerable loss of revenue, estimated at N17 trillion over the past five years.
The discussion took place against the backdrop of FIRS’s budget presentation for 2024, spotlighting the urgent need for fiscal policy reforms.
Senate Expectations
Highlighting a major fiscal concern, the Senate Committee on Finance expressed its dissatisfaction with the current tax waiver system, pointing out its susceptibility to abuse and the significant revenue leakages it has caused.
Senator Sani Musa, Chair of the Finance Committee, underscored the imperative for FIRS to overhaul its tax waiver policies, which have not only led to significant revenue losses but also detracted from the country’s fiscal health.
Musa said:
- “Your projection of N19 trillion as total tax collection for 2024 is good when compared to N11.16 trillion achieved in 2023 but the senate believes that you can do more even to the tune of N30 trillion if required measures are put in place.
- “As impressive and encouraging the performance and projections of FIRS are, under your leadership, this committee and by extension, the Senate, on a serious note, urge you to look at the direction of tax waivers largely being abused with attendant and avoidable losses being incurred on yearly basis.
- “Available records show that within the last five years, about N17 trillion have been lost by the country to tax waivers. It should be suspended and possibly substituted with a rebating system.”
FIRS boss wants to stop N2.7 trillion tax credit
Zacch Adedeji, the Chairman of FIRS, expressed concerns over a proposed N2.7 trillion tax credit for road construction, advocating for a halt to this initiative until the full utilisation of the existing N2.5 trillion allocation. This stance underscores the need for a balanced approach to funding infrastructure while ensuring fiscal prudence.
He said:
- “Regarding tax credit, what I said was that the programme is laudable but that the N2.5 trillion being spent on it by NNPCL should be exhausted before bringing a fresh request.
- “N2.7 trillion fresh request being made should not be entertained because all NNPC revenue should not be spent on roads when the Ministry of Works is there.”
He further highlighted a proactive step towards simplifying Nigeria’s complex tax system.
The FIRS boss said:
- “President Bola Tinubu has seen the issue of multiple taxation as a pool of problems. That is why he set up the presidential committee on tax reforms and fiscal policy. As of today in Nigeria, we have 62 types of taxes being collected. The sad news about that is that less than eight out of the entire 62, accounted for 97% of the collection.
- “We are already consulting and engaging the state government on it. At the end of the day, we won’t have more than eight or nine taxes that the state and federal government would be collecting.”
More Insights
- Despite the high rate of unofficial taxes, the Federal Inland Revenue Service (FIRS) exceeded its 2023 revenue target by N816 billion, reflecting a 107% performance over the set goal.
- The total actual revenue collection for the year 2023 stood at N12.37 trillion, outperforming the N11.56 trillion target.
- The agency also exceeded its 2022 revenue of N10.18 trillion by 21.7%. This collection is part of a consistent growth pattern observed over the past few years, with the revenue figures for 2019 to 2023 being N5.262 trillion, N4.952 trillion, N6.403 trillion, N10.179 trillion, and N12.374 trillion, respectively.
- The Federal Government expects N19.41 trillion in revenue from the FIRS in 2024. This target represents a significant increase of 56.91% from the previous year’s actual and 67.91% from the previous year’s target.
