Abdulwahab Isa 
A switch occurred last week at the top echelon of FIRS between former FIRS Chairman, Nami Mohammed, and Zach Adedeji. The episode promises to scale up the nation’s tax to GDP from 16 per cent to 18 per cent within three years, Abdulwahab Isa reports
Tax revenue has been Nigeria’s bailing source in the last couple of years following misnomer in the behavioral pattern of crude oil prices. Revenue from oil sales over time has been unpredictable. Essentially, this is caused by multiple factors, which include fluctuation in crude oil prices at the international market and enforcement of supply ceiling by the Organisation of Petroleum Exporting Countries (OPEC).
Back home, issues such as insecurity within and around oil producing communities and oil theft combine in making crude oil revenue unreliable. Tax revenue generated by the Federal Inland Revenue Service (FIRS), over time, has been most reliable revenue source for the government. However, it needs to be restated that the country’s annual budget is still predicated on crude oil fundamentals.
The current bumper earnings from taxes is a product of years of reforms initiated by some past chief executive officers of FIRS. It started with Mrs Ifueko M Omoigui Okauru as FIRS Chairman. It was deepened by Mr. Tunde Fowler, and expanded by the immediate past FIRS Chairman, Mohammad Nani. It’s also expected to be upscaled by the newly appointed FIRS Acting Chairman, Dr. Zacch Adedeji.
Tax reforms as revenue booster
Reforms, which transformed FIRS’ story to dependable revenue source of government began 2004 and 2012. The appointment of Mrs Okauru by the Federal Government laid the foundation for rising tax revenue generation by the Service. Okauru led a revolutionary campaign in FIRS. Under her leadership, FIRS witnessed extensive reforms and fundamental transformation.
FIRS employees were made to undergo transformational training. The personnel were paid a fair and commensurate remuneration package. Okauru in one of her reflections in her days at FIRS noted: “We had one goal – to triple non-oil revenues by 2007, and grow overall revenues by 25% year- on-year. “When non-oil growth was largely achieved in 2007 (N265.1 billion in 2003; N714.9 billion (vs N795.3bn) in 2007), our goal focused on increasing collections by 25 per cent year-on-year.
“We focused on the achievement of set goals at every meeting with staff and stakeholders. This guided us. We could measure, track and reflect on why the targets were met or not met. We had a three-year rolling strategic plan that drove our reform efforts through. “A plan that involved all staff, getting their views on where we were, where we wanted to be and how to get there. A plan that clearly sets out our vision, mission, values and goals.
A plan that got the Federal Executive Council under the leadership of the trigger for all these efforts, President Olusegun Obasanjo, to hold a special meeting for the first time, in October 2004, focused on one agenda, approving the tax reform plan, in the first year of our efforts, and first year of my tenure.” Before she left FIRS, tax revenue grew astronomically from slightly below N1.2 trillion in 2004 to over N4.6 trillion in 2011 (over four times the collection figure of 2004).
Within the period, FIRS consistently surpassed the revenue targets set for the Service. Her template reforms were adhered to by her immediate successor, Mallam Kabir Mashi, an in-house officer, who rose through the ranks to make it to the top as FIRS chairman. The tenure of Babatunde Fowler was equally remarkable. The Service scaled up its revenue generation to N5 trillion by the second week of December 2018 with a pledge to the agency to make N5.3 trillion at the end of the year. The highest in FIRS history at the time was N5.07 trillion generated in 2012.
Tax Promax as landmark success
The appointment of Namia, a chartered tax accountant and management professional, in 2019 by former President Muhammadu Buhari, started the era of mega bulk generation by the Service. With a background in the private sector, Nami carried out both restructuring in administration and operations. The Service launched automation of tax administration called Tax Pro- max in 2021.
Tax Promax, an FIRS in house technology, automates a programme that delivers online TCC, automated VAT collection system and integrated tax payment amongst others. Deployment of the technology has increased tax revenue collection by the service from N6 trillion in 2018 to N10.1 trillion in 2022.
Speaking to the Service’s achievements in a space of four years of his tenure, Nami, while handing over to the newly appointed acting chairman, last week described Tax promax as a landmark success. He noted that tax reforms and implementation of operational policies introduced led to reduction in turnaround time for tax operations and significant improvement in voluntary tax compliance.
In addition, Nami recounted that reforms had altered the country’s tax equation in favor of non-oil taxes, a development which set a new record of tax collection in 2021 and 2022. He recalled: “The Service is currently contributing over 70 percent of the revenue being shared monthly by FAAC. The Service is on track to set yet another record in 2023 as it collected over N8.5 trillion from 1st January 1 to September 14, and has assessed, reconciled and recovered over N4 trillion outstanding tax liabilities and sequestered funds from NNPC on behalf of the Federation.
“This total sum of over N12 trillion is exclusive of amounts invested by our taxpayers under the Road Infrastructure Tax Credit Scheme and tax implications of waivers by Gov- ernment from January, 2023 to date. “During the inauguration of the erstwhile Board Members of the Service, I promised to raise the country’s Tax-To-GDP ratio from six per cent to 10 percent in four years. We already have achieved a Tax-to-GDP ratio of 10.86 percent within two years (i.e. as at 31st December 2021).
“It may interest us to know that our projected total 2023 tax collection is a minimum of N15 trillion and a projected tax to GDP of nearly 14% by December 2023. “Certainly, the projections by the current government of tax to GDP of 18% in another four years is not only realizable but can be surpassed.”
Zach, an apostle of voluntary tax compliance
With a population size in the region of over 200 million, some experts put the figure of tax paying Nigerian citizens at 41 million. The tax paying citizens of over 200 million people is grossly an inadequate figure to yield the level of development Nigeria yearns for as majority of taxable Nigerians are still outside of the tax next. Last week, Adedeji assumed duty promising to change tax collection narratives.
The former commissioner for finance in Oyo and immediate past Chief Executive Officer of National Sugar Development Council (NSDC) is an astute accountant, corporate tax and public finance development expert. He has over 15 years of experience in corporate accounting, public service administration and public service advisory. Adedeji is bringing to FIRS administration, dynamic of voluntary tax compliance.
Taking over last week, he gave insights into what tax administration would pan out under his administration. “On a personal note, I firmly believe in the wisdom encapsulated in the statement,” revenue growth is the lifeblood of a nation’s economy, providing the means to fulfil essential duties to its citizens.”
“These words capture the core principle that will guide us as we navigate the challenging terrain ahead, ensuring that our nation thrives and fulfils its obligations to its citizens,” Adedeji said. He bemoaned the current situation in which 96 per cent of government revenue is being channeled into servicing its debts. This, he added, isn’t the way to go and declared to take decisive steps to reverse the trend.
With regard to administering FIRS, he pledged to place innovation, technology, and fresh ideas at the forefront of operations. This strategic focus, he said, would empower the Service to enhance efficiency, fortify against revenue leaks, and bolster coordination and accountability within our organisation. He said he would prioritise voluntary tax compliance as a game changer.
“Our overarching goal is to nurture voluntary tax compliance by establishing a modern, dependable tax system that gamers the trust and admiration of all stakeholders. Through this, we hope to create an environment where taxpayers willingly fulfil their civic duties,” he said. For those who deviate from their tax obligations, he has a subtle message for them. “Rest assured, we will enforce our responsibilities judiciously.
We will implement a robust enforcement model that effectively defers tax evaders while maintaining fairness and transparency in our processes.” Under his watch, Adedeji said the Service shall educate taxpayers why their civic duty matters, thus expressing commitment to simplifying the tax system, making it accessible and comprehensible, thereby facilitating voluntary tax payments and fostering a sense of civic responsibility.
According to him, “quality data will be the cornerstone of our operations, enabling us to measure our progress, make informed decisions, and maintain the highest standards of accountability. “We recognise that data-driven strategies are essential to our success.” He pledged an open-door policy, while actively engaging stakeholders to collaboratively construct a tax administration that we can all take pride in.
“Our aspiration is audacious – to surpass Africa’s average tax-to-GDP ratio of 16.5 per cent and achieve an impressive 18 per cent within three years. By doing so, we aim to reduce our nation’s reliance on borrowing and ensure financial sustainability,” he said.
Last line
Expectedly, tax revenue will soar higher through a combination of voluntary tax compliance mechanism and stakeholders’ open-door policy as Adedeji is bringing to bear in administering FIRS.
