Nigeria faces revenue crisis amidst significant public debt – FIRS chairman warns

Nigeria faces revenue crisis amidst significant public debt - FIRS chairman warns
Nigeria faces revenue crisis amidst significant public debt - FIRS chairman warns

Dr. Zacch Adedeji, the newly appointed Chairman of the Federal Inland Revenue Service (FIRS), has sounded the alarm about Nigeria’s revenue crisis, emphasizing the urgency of addressing the situation.

During his official takeover from his predecessor, Muhammad Nami, Adedeji drew attention to the fact that approximately 96% of the Federal Government’s revenue in the previous year was allocated to debt servicing, a situation he deemed unsustainable.

Nami, the former chairman of the revenue agency, disclosed that FIRS had generated N8.5 trillion in revenue for the federation account as of mid-September.

This revelation aligns with the government’s decision to remove fuel subsidies, citing inadequate revenue to sustain the country’s operations.

Adedeji stated, “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.”

He also emphasized the need for immediate action to address the situation, especially when debt has surpassed the Gross Domestic Product (GDP) and debt servicing outpaces revenue.

Enhanced revenue generation and tax reform

Adedeji outlined his agenda to optimize revenue generation, including aligning with President Bola Tinubu’s fiscal policy and tax reform initiatives.

He stressed the importance of technological innovation, efficient internal processes, and coordination of tasks to eliminate revenue leakages and ensure all tax revenues reach government coffers.

The new FIRS chairman pledged to encourage voluntary compliance among taxpayers and engage stakeholders in fostering a tax administration that enjoys their trust and confidence.

Adedeji stated, “We need to build a tax system that is smart and modern, one with unquestionable integrity and will earn the trust as well as admiration of stakeholders.”

In his remarks, the outgoing chairman, Muhammad Nami, revealed that the agency was on track to set a new revenue record in 2023, having collected N8.5 trillion as of September 14.

He also highlighted significant recoveries made during his tenure, including N4 trillion from the Nigerian National Petroleum Company Limited (NNPCL).

Nami expressed confidence in surpassing the 18% Tax-to-GDP target set by the current administration, emphasizing the agency’s commitment to contributing significantly to Nigeria’s revenue generation.

The new FIRS chairman concluded by urging management and staff to uphold integrity, maintain taxpayer confidentiality, and demonstrate professionalism and fairness in their service delivery.