The National Assembly has just raised the revenue target for the Federal Inland Revenue Service (FIRS), after the agency exceeded its 2024 revenue collection target of ₦19.4 trillion. Zacch Adedeji, the Executive Chairman of FIRS, presented the agency’s impressive performance, revealing that it surpassed expectations. As a result, the National Assembly’s joint Committee on Finance proposed a target of ₦25 trillion for the FIRS in 2025. While the news was met with praise, it also triggered debates on the potential to do even more, highlighting the need for a strategic overhaul in the country’s tax system.
What They Are Saying
In his presentation, Adedeji detailed the agency’s exceptional performance and outlined projections for the future. Lawmakers were quick to acknowledge the achievement, with Deputy Chairman of the House of Representatives Committee on Finance, Hon. Saidu Musa Abdullahi, commending FIRS’ unprecedented success. “We shall give you total support on your tax reform, but you need to bring more taxable citizens into the net from the informal sector,” Abdullahi said. His comments came in light of the fact that South Africa’s tax collection system, which brings in higher revenues despite a smaller population, serves as a model worth studying.
However, not everyone was fully satisfied. Hon. Benedict Sapele, another lawmaker, voiced his concerns, suggesting that FIRS could do much better. He pushed for a target of ₦60 trillion for 2025, arguing that Nigeria’s success in deepening its tax net could eliminate the need to borrow to fund the national budget. “If we do well, we will not borrow to fund our budget,” Sapele stated.
In response to the criticisms and suggestions, Adedeji emphasized that multiple agencies collecting taxes often lead to revenue leakages. He believes that these issues can be mitigated by passing the progressive tax bill. Adedeji also expressed reservations about taxing the informal sector without first formalizing it. “I am not in support of taxing the informal sector without first formalizing it,” he said, stressing the importance of transitioning informal businesses into the formal economy before implementing any tax measures.
Bottom Line
The discussions in the National Assembly signal a new phase in the ongoing reforms at FIRS, with lawmakers pushing for more aggressive action to widen the tax base and increase the country’s revenue. While the targets set by the National Assembly are ambitious, it will require a balanced approach to ensure that the informal sector is properly integrated into the system. As Nigeria strives to meet its growing financial needs, the focus will now be on ensuring that the country’s tax reforms are both effective and sustainable in the long term. If FIRS can expand its taxpayer base and streamline tax collection, Nigeria could reduce its reliance on borrowing and move closer to achieving fiscal independence.
