• Friday, July 12, 2024
businessday logo

BusinessDay

New FIRS Chairman targets 18% tax-to-GDP in 3 years

Nigeria will have maximum of nine taxes after presidential committee’s work – Adedeji

Zacch Adedeji, newly appointed Acting Chairman of the Federal Inland Revenue Service (FIRS) on Monday set a lofty 18% tax-to-GDP ratio target to be attained by the federal government in the next three years.

Adedeji was speaking as he took over from his predecessor, Muhammad Nami, who was directed last Thursday by President Bola Tinubu to proceed on three months of pre-retirement leave ahead of his formal exit by December this year.

“Our aspiration is audacious – to surpass Africa’s average tax-to-GDP ratio of 16.5% and achieve an impressive 18% within three years.

“By doing so, we aim to reduce our nation’s reliance on borrowing and ensure financial sustainability,” Adedeji noted.

At approximately 10.8 percent tax-to-GDP, Nigeria ranks as one of the lowest tax earners globally as all manner of tax rebates and evasion hold sway amid tight revenues.

While tax incomes went up 56 percent in 2022 to a record 10 trillion naira, former President Buhari, left a record 77 trillion naira debt.

The budget office disclosed earlier this month that the federal government deployed as much as 99 percent of its N4.06 trillion revenues to service debt within the first half of the year.

But Adedeji is optimistic that the trend would be reversed by leveraging data, innovation and technology amid stakeholders’ partnership.

Read also Zaccheus Adedeji appointed acting FIRS chairman

“As we chart our course ahead, FIRS is committed to placing innovation, technology, and fresh ideas at the forefront of our operations. This strategic focus will empower us to enhance efficiency, fortify against revenue leaks, and bolster coordination and accountability within our organization,” he stressed.

“Our overarching goal is to nurture voluntary tax compliance by establishing a modern, dependable tax system that gamers the trust and admiration of all stakeholders. Through this, we hope to Create an environment where taxpayers willingly fulfil their civic duties.”

Adedeji who till his new appointment served briefly as Tinubu’s Special Adviser on revenue, warned those deviating from their tax obligations, that FIRS will enforce its responsibilities judiciously.

His words: “We will implement a robust enforcement model that effectively defers tax evaders while maintaining fairness and transparency in our processes.

“A fundamental aspect of our mission is to elucidate to taxpayers why their civic duty matters. We are committed to simplifying our tax system, making it accessible and comprehensible, thereby facilitating voluntary tax payments and fostering a sense of civic responsibility.

“Quality data will be the cornerstone of our operations, enabling us to measure our progress, make informed decisions, and maintain the highest standards of accountability. We recognise that data-driven strategies are essential to our success.”

While speaking, he also raised concerns of a pressing revenue crisis, with a staggering 96% of government revenue being funnelled into servicing debts.

According to him, “This stark reality necessitates swift and resolute action on our part. We cannot afford to delay; we must act decisively to reverse this concerning trend.

“In our pursuit of a brighter fiscal future, we are determined to align ourselves with President Bola Tinubu’s esteemed Fiscal Policy and Tax Reforms Committee. This collaboration will enable us to shape a prosperous fiscal landscape that empowers our nation’s growth and development.”

He also pledged to maintain an open-door policy, actively engaging with stakeholders
To construct a formidable tax administration collaboratively and build an institution “that serves as a beacon of excellence.”

He further mentioned the principles of integrity, confidentiality, professionalism, and fairness as “non-negotiable” in the service to the nation.

“Upholding these values will guide our actions and interactions as we work tirelessly to fulfil our mission,” he pledged.

In his fairly long handover speech, Nami reeled out several of his four years achievements, including Administrative and Operational Restructuring, Automation of tax administration processes, creation of a customer-focused organisation as well ell as making the FIRS processes data-based.

He announced that the FIRS is currently contributing over 70% of all revenues the Federation Account Allocation Committee (FAAC) disbursed monthly.

Read also Assessing Nami’s two years at the helm of the Federal Inland Revenue Service

Besides that, Nami also disclosed that the FIRS is on track to set yet another record in 2023 as it collected over N8.5trillion (cash) between January 1 to September 14, 2023
and has assessed, reconciled and recovered over N4 trillion outstanding tax liabilities and sequestered funds from NNPC on behalf of the Federation.

According to him, this total sum of over N12 trillion is exclusive of amounts invested by taxpayers under the Road Infrastructure Tax Credit Scheme and tax implications of waivers by Government from January, 2023 to date.

Nami had during the inauguration of the erstwhile Board Members of the Service, promised to raise the country’s Tax-To-GDP ratio from 6% to 10% in four years.

He said the service has already have achieved a Tax-to-GDP ratio of 10.86% within two years (i.e. as at 31st December 2021.)

The service had projected a minimum total 2023 tax collection of N15 trillion and a projected tax to GDP of nearly 14% by December 2023.

“Certainly, the projections by the current government of tax to GDP of 18% in another four years is not only realisable but can be surpassed,” he noted, while encouraging the new FIRS acting chair to continue with ongoing reforms and projects in the service for the benefit of the economy.