The Federal Government is projecting to generate N32.9 trillion in tax revenue as against the current N10.1 trillion recorded by the Federal Inland Revenue Service (FIRS) for 2022.
The Federal Government yesterday launched an ambitious tax drive aimed at doubling revenue over the next three years after setting up a committee headed by a tax expert, Taiwo Oyedele, fiscal policy partner and Africa tax leader at PricewaterhouseCoopers LLP.
Nigeria’s Tax-to-GDP ratio in the last 12 years has hovered between 5 per cent and 6 per cent and rose to 10.86 per cent by the end of 2021 but the Federal Government is targeting an increase above 18 per cent.
If realised, the federal government could comfortably service the country’s debts now heading to N80 trillion on account of the Naira devaluation.
The new administration has made it clear that it wants to harvest more revenue but in a humane and attractive manner.
Special Adviser to the President on Revenue, Mr. Adelabu Adedeji, while speaking on the creation of the Presidential Committee on Fiscal Policy and Tax Reforms said: “Our aim is to transform the tax system to support sustainable development and achieve a minimum of 18 per cent Tax to GDP ratio within the next three years without stifling investment or economic growth.
Nigeria’s low Tax-to-GDP ratio, Adedeji said, “has led to an overreliance on borrowing to finance public spending which in turn limits the fiscal space as debt service costs consume a greater portion of government revenue, annually resulting in a vicious cycle of inadequate funding for socio-economic development.
He identified the key challenges confronting Nigeria’s tax system as “multiple taxes and revenue collection agencies, fragmented and complex tax system, low tax morale, high prevalence of tax evasion, high cost of revenue administration, lack of coordination between fiscal and economic policies, and poor accountability in the utilization of tax revenue.”
He said the establishment of this committee “reflects President Tinubu’s commitment to addressing these challenges and bringing about transformative reforms in fiscal policy and taxation.”
He added:”The committee’s primary objective is to enhance revenue collection efficiency, ensure transparent reporting, and promote the effective utilization of tax and other revenues to boost citizens’ tax morale, foster a healthy tax culture, and drive voluntary compliance.
These efforts will not only improve Nigeria’s revenue profile but also create a more conducive and internationally-competitive business environment.
The setting up of the panel came on the heels of the President’s signing of four executive orders on Thursday to boost economic activities and reduce hardship.
