The President, Chairman of Council of the Lagos Chamber of Commerce and Industry (LCCI), Mr. Gabriel Idahosa, has described the Federal Inland Revenue Service’s (FIRS) goal to increase tax collection by 57 per cent, targeting a revenue of N19.4 trillion for 2024, as a major shift towards non-oil revenue generation to strengthen the economy.

Specifically, the LCCI president stated that this projection included N9.96 trillion from oil revenue and N9.45 trillion from non-oil sources.

Speaking at the LCCI- FIRS organised Private Sector Stakeholder Engagement in Lagos, recently, Idahosa posited that the decision was both timely and crucial, given the evolving fiscal landscape in Nigeria.

The theme of the engagement was “Emerging Tax Matters.” According to him, “taxation, as we all know, plays a pivotal role in shaping economic growth, promoting equity, and enabling sustainable development.

In recent times, Nigeria’s tax system has undergone significant transformations driven by reforms and policy changes to boost revenue, simplify compliance, and address critical fiscal challenges.

“Under its new leadership, the Federal Inland Revenue Service (FIRS) has set ambitious goals to increase tax collection by 57 per cent, targeting a revenue of N19.4 trillion for 2024.

This projection includes N9.96 trillion from oil revenue and N9.45 trillion from non-oil sources, signaling a shift toward non-oil revenue generation to strengthen the economy .”Idahosa, however, pointed out that despite these efforts, Nigeria’s current tax-to-GDP ratio stood at just 10.86 per cent, far below the African average of about 15-20 per cent.

He explained that the government aimed to achieve a tax-to-GDP ratio of 18 per cent within the next three years through the newly introduced tax reforms. The LCCI president pointed out that reaching this goal required a concerted effort from both the public and private sectors, along with targeted reforms aimed at simplifying tax policies and encouraging compliance.

According to him, “in July 2023, President Bola Ahmed Tinubu, inaugurated the Presidential Committee on Fiscal Policy and Tax Reforms, chaired by Mr. Taiwo Oyedele. “The committee’s mandate was to overhaul Nigeria’s fiscal and tax policies to enhance revenue collection, reduce multiple taxation, and streamline tax administration.

“Several key recommendations have emerged from this Committee, with both immediate and long-term objectives designed to modernize Nigeria’s tax system .

“Key recommendations include leveraging technology through the “Data4Tax” initiative to expand the tax base, providing tax relief for low-income earners and employers who raise wages, and simplifying tax compliance, particularly for SMEs.” He added:

“Additionally, the government seeks to reduce fiscal leakages by reassessing over N6 trillion lost annually due to incentives and waivers, with the view of discontinuing them to boost revenue.

“Other fundamental changes include reduced Withholding Tax rates for various services, such as professional and construction services, and new WHT rates for non-resident entertainers, lottery winnings, and directors’ fees.

“These reforms, driven by the Presidential Fiscal Policy and Tax Reforms Committee, aim to modernize tax administration and create a more equitable tax system.” Indeed, the Chairman of Council of LCCI stressed that the private sector was indispensable in Nigeria’s economic development and, by extension, its tax base.

“However, multiple taxation continues to pose a significant challenge to businesses. “The committee has recommended a suspension of certain taxes that disproportionately burden SMEs and the less affluent, a move expected to foster a more conducive environment for business growth and compliance.

“Moreover, the government is intensifying efforts to curb tax evasion and noncompliance, particularly within the informal sector, which remains significantly under-taxed .” The LCCI president said: “As we move forward in 2024, Nigeria’s fiscal policy is at a critical juncture.

The emerging tax matters we will discuss today signal opportunities and challenges. “The drive to expand the tax net, streamline the system, and boost compliance is essential for securing Nigeria’s economic future.

“Yet, for these reforms to succeed, the government must foster trust through transparency and fairness, while businesses and citizens must embrace a culture of tax compliance.”