The Senate’s Finance Committee is urging the Federal Inland Revenue Service (FIRS) to strive for a challenging tax revenue target of N30 trillion by 2024.
This request comes after a thorough examination of the current tax waiver policies, which the Senate believes have resulted in a significant revenue loss of around N17 trillion over the last five years.
The discussion occurred during FIRS’s budget presentation for 2024, emphasizing the pressing need for fiscal policy changes.
The Senate Committee on Finance has raised a significant fiscal issue regarding the current tax waiver system. They are concerned about the system being vulnerable to abuse and causing a substantial loss of revenue.
Senator Sani Musa, Chair of the Finance Committee, emphasized the need for the FIRS to revamp its tax waiver policies. These policies not only result in significant revenue losses but also harm the country’s fiscal well-being.
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.”
Zacch Adedeji, the Chairman of FIRS, raised concerns about a proposed N2.7 trillion tax credit for road construction. He suggested pausing this initiative until the current N2.5 trillion allocation is fully utilized. This highlights the importance of balancing infrastructure funding and maintaining fiscal responsibility.
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 emphasized taking proactive measures to simplify Nigeria’s complicated 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.”
The Federal Inland Revenue Service (FIRS) surpassed its revenue target for 2023 by N816 billion, which is 107% higher than the set goal, despite the prevalence of unofficial taxes.
