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The Federal Government is pressing ahead with critical tax reforms with the hope of hitting 18 per cent tax to Gross Domestic Product ratio by 2026.
In August 2023, President Bola Tinubu inaugurated the Presidential Fiscal Policy and Tax Reforms committee, headed by Taiwo Oyedele, with a mandate to achieve 18 per cent tax-to-GDP ratio in the next 12 months.
While inaugurating the committee, Tinubu who lamented that Nigeria’s tax to GDP ratio is the lowest and below Africa’s average, assured that his administration will “tax the fruits and not the seed”.
He listed the broad assignments of the Committee to include harmonisation of taxes, improving revenue profile, transforming the tax system and achieving a minimum of 18 per cent of the tax to GDP ratio.
Nigeria’s tax-to-GDP ratio is currently one of the lowest in the Sub-Saharan Africa region at 10 per cent as of 2023.
The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, earlier this year said that tax reform committee chairman noted that his committee plans to increase the tax-to-GDP ratio from 10 per cent to 18 per cent in the next two to three years without introducing new taxes.
In October 2024, Executive Chairman of FIRS, Dr Zacch Adedeji, expressed confidence in meeting its ambitious target of an 18 per cent tax-to-GDP ratio by 2026.
This, the FIRS said can be achieved through the integration of technology, enhanced processes, and comprehensive capacity-building efforts as key drivers of success.
To achieve this target, Nigeria will have to make about N44.34tn in tax revenue, as the country’s nominal GDP is currently at N246.35tn, according to data from the National Bureau of Statistics, covering the second quarter of 2023 up to the second quarter of 2024.
The 2026 target is more than double the FIRS’ target for 2024, which is N19.41tn, with about N3.94tn generated in the first quarter of 2024.
Although the Q1 performance represents a 56.7 per cent increase compared to the corresponding quarter in 2023, the revenue fell short of the quarterly target set by the FIRS, which was N4.8tn.
However, FIRS exceeded its 2023 revenue target by an N816bn, reflecting a 107 per cent performance over the set goal.
The total actual revenue collection for the year 2023 stood at N12.37tn, outperforming the N11.56tn target.
The agency also exceeded its 2022 revenue of N10.18tn by 21.7 per cent.
This collection is part of a consistent growth pattern observed over the past few years, with the revenue figures for 2019 to 2023 being N5.262tn, N4.952tn, N6.403tn, N10.179tn, and N12.374tn, respectively.
The Federal Government expects N19.41tn revenue from the FIRS in 2024. This target represents a significant increase of 56.91 per cent from the previous year’s actual and 67.91 per cent from the previous year’s target.
The Federal Government expects more taxes from the oil sector, about N9.96tn this year. This is about 214.2 per cent of what was generated from this form of tax last year.
The Senate, through its Finance Committee, recently urged the FIRS to aim for an ambitious tax revenue goal of N30tn in 2024.
This call to action was accompanied by a critical review of the current tax waiver policies, which, according to the Senate, have led to a considerable loss of revenue, estimated at N17tn over the past five years.
Meanwhile, state governors in the northern region have restated their opposition to the proposed tax reform submitted recently by President Bola Tinubu to the National Assembly for approval.
The governors including Bauchi State governor Bala Mohammed, Kano State, Yobe State, Plateau State, Gombe and Katrina State.
According to them, the bill still needs wide consultation before it can be passed.
Speaking, Bauchi State government reechoed the stance of northern leaders on the value-added tax reform bills before the national assembly.
When contacted on the stance of the Bauchi State government, the Senior Special Adviser to the Bauchi State Governor on Media and Publicity, Mukhtar Gidado, noted that “The northern governors has unanimously made their stance clear on the bill.
“I don’t have to in isolation say anything. The north spoke with one voice and that is it.”
The Kano State Government said that it will await the response of the Northern Governors’ Forum on the Federal Government position on the VAT Reform Bill.
The Kano State Commissioner of Information and Internal Affairs, Baba Halilu Dantiye stated this in a telephone interview on Sunday.
He said the Kano State Government will not comment on the issue because the recommendation for the withdrawal of the VAT Reform Bill was made by the Northern Governors’ Forum of which Kano is a member.
“The recommendation for the withdrawal of the Bill was made by the Northern Governors’ Forum of which Kano is a member of the Forum.
“So, we should await the response of the Forum which will certainly meet and deliberate on the Federal Government’s position,” Dantiye said.
Also, Yobe State indicated its support for the position taken by the Northern Governors’ Forum on the proposed Value Added Tax reform bill.
The Commissioner for Home Affairs, Information and Culture, Abdullahi Bego, confirmed this in a chat with one of our correspondent on Sunday.
“Yobe State’s position aligns with the communique issued by the Northern Governors’ Forum,” Bego stated.
“We stand by the decisions reached during their meeting.”
The Commissioner’s statement suggests that Yobe State will adopt the stance outlined in the communique, which likely details the forum’s concerns and proposed amendments regarding the VAT reform bill.
An aide to the Plateau state Governor, Yiljap Abraham, said the presidency will hear the position of the governor after fresh consultations are made.
Yiljap who is the Special Adviser to the Plateau state Governor on Policy and Governance told our Correspondent in the telephone conversation that the 19 state governors including Plateau would declare their positions after consultations are concluded .
According to him, the consultations among member states were ongoing.
Asked whether Plateau state will mobilise it’s national Assembly members to oppose the bill,the governor’s aide said “I can’t say anything regarding that for now but I think there is something the northern governors are doing that will place their position in very active form that will go beyond what they have said. I think we just have to wait a little bit and then,we hear about it.”
Meanwhile, the Gombe State Government has sought for calm on the refo bill, saying that there’s no cause for alarm over a proposed bill currently before the National Assembly on VAT reform.
The Director-General Press Affairs at Gombe Government House, Ismaila Misilli, made this disclosure in a telephone chat with our correspondent.
“The Governors’ Forum is yet to speak. However, from my experience as one who is familiar with the workings of the National Assembly, this is a routine thing,” Misilli said.
According to him, the first reading of the bill is merely a presentation before the National Assembly and doesn’t necessarily mean it will pass.
“First reading is just presentation of that particular bill before any of the chambers of the National Assembly. So, it’s a normal thing and not passing the bill,” Misilli explained.
He added that debate will commence at the second reading stage, where lawmakers from the zone will play their part in supporting their governors’ stance.
“It has not reached that position yet. At the debate stage and third reading, Northern Senators and House of Representatives members will play their own role based on the advice of the governors.There’s nothing to be worried about,” he said.
Misilli’s reassurance comes amidst concerns over the proposed bill’s potential impact on the region.
The Director General Media to Governor Dikko Umar Radda of Katsina State, Mallam Maiwada Danmallam said that the issue of the VAT Reform bill at National Assembly sent by the federal government was a collective decision of all the 36 governors to take.
Maiwada made this while reacting to a question put to him by our correspondent in Katsina on Sunday to what will his principal (Governor Radda) do to ensure Katsina state is not shortchanged in the VAT Reform bill since the Federal Government said it would not withdraw the bill from NASS for consultation in line with the 36 govs request.
According to him “well, this is not a decision for an individual governor. It’s the decision of the governors of the region to reject the proposed tax reforms due to reasons they considered unfair to the region.
“Then we should expect whatever line of action the governors may take to do so collectively not as individuals. And if the federal government will not budge, then I suppose the governors may likely try to convince member of the National Assembly from the region to see it their way and give them their support. In the end, I’m sure the federal government and the governors will have an amicable solution to the problem given the fact that they mostly belong to the same party and both are pursuing the same objective of giving Nigeria the best deal irrespective of regional, religious or political subscriptions.
“In a nutshell, I’m sure neither the federal government nor the states will be shortchanged.”
