FIRS has become a crucial revenue source for Nigeria, contributing significantly to the Federation Account while reducing dependency on oil revenues. Under Zacch Adedeji’s leadership, FIRS has streamlined tax processes and engaged more effectively with taxpayers, leading to increased voluntary registrations and overall tax collection. President Tinubu’s economic policies have also supported this growth, aiming for greater fiscal health and stability across government tiers.
Before Nigeria’s Independence in 1960, agriculture was the backbone of its economy, with regions thriving on various produce such as groundnuts, cocoa, rubber, and palm oil. The discovery of crude oil in 1956 shifted this dynamic, transforming oil into the primary source of revenue for the nation, leading to reliance on the Nigerian National Petroleum Corporation (NNPC) for fiscal stability. However, the era of dependency on NNPC’s revenue appears to have ended, as attention increasingly turns to the Federal Inland Revenue Service (FIRS), which has become a crucial source of revenue for the government.
In 2024, FIRS significantly contributed to the Federation Account, accounting for approximately 70% of total revenues shared among federal, state, and local governments. In January, out of a total of N2.068 trillion collected, FIRS alone contributed N1.275 trillion, demonstrating its importance as a primary revenue generator. This trend continued in subsequent months, with FIRS contributions growing month over month, highlighting its evolution into the new fiscal engine of Nigeria.
FIRS’s significant contributions reflect a strategic transformation under the leadership of Zacch Adedeji, focusing on modernized revenue collection methods and taxpayer engagement. By establishing customer-centric operations and simplifying tax processes, FIRS has become more effective and welcoming to taxpayers, resulting in a considerable increase in voluntary registrations on its tax platform.
The growth in tax revenue, primarily from the non-oil sector, underscores the Nigerian government’s commitment to diversifying its economy. President Bola Tinubu’s policies, particularly the removal of fuel subsidies and the unification of exchange rates, have also played a critical role in enhancing revenue collection. Moreover, Adedeji aims to continue increasing the tax-to-GDP ratio without burdening taxpayers, aspiring to collect N25.2 trillion in tax revenue by 2025, which would further boost the financial resources available to government tiers.
In summary, the significant rise in contributions to the Federation Account by FIRS is indicative of successful reforms and the shift in focus from oil revenues to tax revenues, representing a vital step toward sustained fiscal health in Nigeria. President Tinubu’s administration is commended for facilitating this transformation, resulting in a remarkable increase in funds allocated to states, significantly enhancing their fiscal capabilities.
The Federal Inland Revenue Service (FIRS) has emerged as a leading contributor to Nigeria’s fiscal stability, accounting for a significant portion of the Federation Account revenues. This shift from oil reliance to robust tax revenue is driven by strategic reforms under the leadership of Zacch Adedeji and supportive policies from President Bola Tinubu. The continued growth in tax collection is expected to provide essential resources for the government at all levels, enhancing overall economic resilience and development.
Original Source: businessday.ng
