Nigeria’s economic landscape is shifting from oil dependence to increased tax revenues, spearheaded by the FIRS under Zacch Adedeji. As of early 2024, FIRS has contributed more than 70% of the monthly fiscal pool, surpassing traditional oil revenues. Strategic reforms have enabled significant taxpayer growth and efficiency, aligning with President Tinubu’s policies for economic diversification.
Before Nigeria gained independence in 1960, its economy heavily depended on agriculture, with each region contributing significantly through products such as groundnuts in the North and cocoa in the West. However, the discovery of crude oil in 1956 changed this dynamic, rendering oil revenue the primary source for the national fiscal pool, thus overshadowing agricultural contributions. The Nigerian National Petroleum Corporation (NNPC) became the central entity for governmental reliance on fiscal projections.
The once crucial contributions from NNPC have diminished, with recent focus shifting towards the Federal Inland Revenue Service (FIRS) as a key revenue generator. FIRS has taken center stage, providing around 70% of the revenues shared at the Federation Account Allocation Committee (FAAC). Under Zacch Adedeji’s leadership, the agency’s efficiency has propelled it to become the most significant revenue source for the three tiers of government.
In January 2024, the total revenue for the Federation Account was N2.068 trillion, with FIRS contributing N1.275 trillion, marking over 50% of the monthly pool. This trend continued, showing consistent growth in tax collection; by May, FIRS’s contribution surged to N1.571 trillion. Each month saw rising figures, confirming FIRS as a dominant player in Nigeria’s financial landscape, surpassing oil revenue from NNPC and other bodies.
The trajectory of FIRS contributions remains strong; for instance, in July 2024, the agency remitted N2.295 trillion out of a total of N3.508 trillion to FAAC. The surge illustrates FIRS’s pivotal role in providing fiscal stability and highlights an ongoing shift from oil to tax revenues. Dr. Oluwatoyin Madein, Accountant General of the Federation, acknowledged this transformation, stating that tax revenue now represents the highest source of income for the Federation, demonstrating the significance of FIRS’s contributions at FAAC meetings.
The impressive revenue figures can be attributed to strategic reforms initiated by FIRS under Zacch Adedeji’s guidance, which have made taxation more efficient and taxpayer-focused. By revamping operations and simplifying processes, FIRS has transformed into a client-centered entity that prioritizes taxpayer support. Adedeji emphasized, “We restructured our operations… to develop expertise… and provide them with a one-stop shop.” This approach has significantly bolstered taxpayer enrollment, with a 25.3% rise in registered taxpayers in 2024.
Mr. Gabriel Idahosa, president of the Lagos Chamber of Commerce and Industry, praised FIRS for these reforms, highlighting the agency’s alignment with business needs and enhanced use of technology. FIRS’s growth indicates a new era in Nigeria’s economic strategy, countering the once oil-dependent economy. The contributions have primarily come from the non-oil sector, reinforcing the current administration’s commitment to diversify the economy.
Adedeji attributes the success of FIRS to the visionary policies of President Bola Tinubu, notably the removal of fuel subsidies and unified exchange rates, which have positively influenced tax revenue. Despite these successes, Adedeji maintains that there are further heights to achieve, with goals to increase Nigeria’s tax-to-GDP ratio to 18% in the next three years without overburdening taxpayers. He insists the foundation for continued growth rests on data accuracy and merit.
The shift from oil dependence to a robust tax revenue framework in Nigeria exemplifies strategic fiscal reform under the leadership of FIRS and President Bola Tinubu. The consistent growth in revenue generation by FIRS under Zacch Adedeji demonstrates a successful transition in the country’s economic reliance. By concentrating on taxpayer engagement and administrative efficiency, FIRS has positioned itself as the new backbone of Nigeria’s financial health, fostering greater fiscal stability for all governmental tiers.
Original Source: businessday.ng
