Revenue Crisis Looms in Nigeria Amidst Soaring Public Debt, Warns New FIRS Boss Adedeji

Dr Zacch Adedeji, the newly appointed chairman of the Federal Inland Revenue Service (FIRS), has warned that Nigeria is facing a revenue crisis that needs urgent intervention.

He made this remark during his handover ceremony with his predecessor, Muhammad Nami, who announced that the FIRS had collected N8.5 trillion for the federation account as of mid-September. Adedeji pointed out that the Federal Government spent about 96 percent of its revenue on debt servicing in 2020, which he said was unsustainable.

He also recalled that the removal of fuel subsidy was partly due to the low revenue generation of the country.

Adedeji said: “We are in a revenue crisis, government revenue is low amid a huge public debt.
Last year, 96 per cent of government revenue went into debt servicing.

“Where debt has grown bigger than the Gross Domestic Product, GDP, and debt servicing faster than revenue, immediate actions have to be taken to remedy the situation.”

On his agenda to optimise revenue generation, he said: “In this direction, therefore, we will key into the reforms being made by President Bola Tinubu who has since inaugurated a Presidential Fiscal Policy and Tax Reforms Committee.

“The mandate of the committee is to, among other things, evolve an effective design and implementation of fiscal policy and tax reforms for economic prosperity.

“At FIRS, we will embrace efforts being made to design a tidy fiscal landscape for the country and in the process, address some of the obstacles impeding effective operations of the service as the primary agency of government responsible for administration, assessment, collection, accounting as well as enforcement of taxes and levies.

“We need to innovate and build our operations on foolproof technology, while also evolving a hub of fresh ideas and creativity. “

He promised to eradicate inefficiencies in the system, aiming to collect all tax revenues for the government treasury.

“We must definitely plug leakages. We need to strengthen our internal processes and control mechanisms. We must put a high premium on effective coordination of assigned tasks and delegated responsibilities,’’ he added.

According to Adedeji, his team will promote a culture of voluntary compliance among taxpayers by educating them on their responsibilities and the benefits of fulfilling them. He said that his team will communicate with stakeholders and raise their awareness on the importance of voluntary compliance.

His words: “Under me, we will not force things down the throats of our stakeholders. I will always be ready to engage with them, work with and through them, to jointly build a tax administration that we will all be proud of and one that enjoys the trust and confidence of all.

“Broadly, we intend to come up with a menu of strategies that will stimulate voluntary payment of taxes and levies.
“Yes, this is achievable because Nigerians acknowledge the need for the government to increase its revenue to be able to meet its obligations to them.

“In doing this, we will build a tax system that is smart and modern, one with unquestionable integrity and will earn the trust as well as admiration of stakeholders.”

He urged the staff and management to “maintain high standards of integrity, respect taxpayers’ privacy, and exhibit a high level of professionalism, fairness and exemplary public service.”

The former chairman of FIRS, Muhammad Nami, revealed that the agency was on track to break a new revenue record in 2023, having collected N8.5 as at September 14.

He also said that his administration had assessed and recovered another N4 trillion from the Nigeriian National Petroleum Company Limited, NNPCL.

Nami said he had exceeded his four-year target of 10 per cent Tax-to-GDP ratio in two years, reaching 10.86 per cent.

He expressed confidence that the 18 per cent target in four years, set by the current administration, was not only attainable but could be surpassed.

In 2022, the FIRS achieved a revenue target of N10 trillion and collected N10.1 trillion within the period. Likewise, in 2023, it set a target of N12 trillion in revenue and has collected N8.5 trillion, with about four months to the end of the year.

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