FIRS’ tax revenue surpasses crude oil as Nigeria’s main economic driver

DDM News

Before now, the Nigerian economy relied solely on crude oil proceeds, contributing nearly 90% of its revenue earnings.

But today, PBAT’s economic reforms have changed Nigeria’s economic fortune—crude oil proceeds now contribute less than 25%.

The present economic reality indicates that the Federal Inland Revenue Service (FIRS) now accounts for more than 50% of the Nigerian economy.

The Federal Inland Revenue Service (FIRS) was created in 1943.

Prior to that time, its functions had been performed by the Inland Revenue Department of British West Africa.

The Board of Inland Revenue was created in 1958, and the service gained autonomy with the passing of the FIRS (Establishment) Act 13 of 2007.

In 2003, the Federal Government of Nigeria recognized that poor service delivery in the public sector had becme an urgent national issue.

As a result, it undertook a series of steps that led to the establishment of a Service Compact (SERVICOM) with all Nigerians in March 2004.

This was followed by the creation of the SERVICOM office within the Presidency to ensure the entrenchment of excellent service delivery in the public sector through policies, programs, and practices.

In line with the subsequent Presidential Mandate, the FIRS created a unit in 2014 to institutionalize service delivery within the organization.

This unit has undergone various transformations to align with the evolving FIRS organizational reforms and meet the needs of taxpayers and stakeholders.

In 2011, FIRS established a Taxpayer Service Department (TPSD) to enhance its focus on taxpayers.

Additionally, in 2012, the National Taxpayer Advocate position was created to ensure effective high-level advocacy for taxpayers.

Diaspora digital media (DDM) revealed that before Nigeria’s independence in 1960, agriculture was the mainstay of its economy.

With the discovery of crude oil in 1956, it supplanted agriculture as the main contributor to Nigeria’s national revenue.

The Federal Inland Revenue Service (FIRS) has now become the main contributor to the Federation Account Allocation Committee (FAAC), replacing the Nigerian National Petroleum Corporation (NNPC).

FIRS accounted for more than 50% of the total revenues collected and shared by the three tiers of government at FAAC meetings in January 2024, totaling N1.275 trillion out of N2.068 trillion.

FIRS’ contribution grew in February by N300 billion, amounting to N1.491 trillion out of N2.3 trillion.

In March, April, and May, FIRS contributed N1.061 trillion, N1.187 trillion, and N1.571 trillion, respectively.

In June, FIRS accounted for N2.841 trillion out of N3.5 trillion in the Federation Account.

FIRS contributions remained high in July and August, accounting for N2.295 trillion and N1.87 trillion, respectively.

From September to December, FIRS contributions were N1.45 trillion, N1.74 trillion, N1.56 trillion, and N1.41 trillion, respectively.

Tax revenue is now the highest source of revenue for the Federation.

The Accountant General of the Federation emphasized the importance of FIRS contributions for fiscal stability and accurate revenue prediction.

The commendable collection performance aligns with Adedeji’s vision of making taxation the pivot of national development.

FIRS’ impressive revenue collection is a result of well-thought-out strategies and process re-engineering.

FIRS restructured operations to be customer-centric, improving its relationship with taxpayers.

FIRS provides a one-stop shop for taxpayers’ activities.

FIRS views taxpayers as partners in progress.

FIRS aims to ensure taxpayers are well-supported to yield good results.

Streamlined tax processes led to a significant increase in new taxpayers, with 182,724 voluntarily enrolling on the Tax Pro-Max platform in 2024.

The president of the Lagos Chamber of Commerce and Industry (LCCI) commended FIRS for reforms that align with business needs.

The non-oil sector accounts for about 75% of total tax revenue, showing a commitment to diversifying the economy.

Key policies by President Tinubu, such as the removal of fuel subsidies and unification of exchange rates, boosted tax revenue collection.

Adedeji aims to grow Nigeria’s tax-to-GDP ratio to 18% in the next three years.

Data and merit are crucial for the continued upward trajectory of tax revenue.

FIRS is targeting N25.2 trillion in tax revenue for 2025, and a modernized tax system can further boost domestic revenue mobilization.

About 70% of the money shared at FAAC meetings comes from FIRS-collected tax revenue.

States now collect almost three times what they used to receive as FAAC allocations.

This report is based on a write-up by Adekanmbi, the Special Adviser on Media to the Executive Chairman of the Federal Inland Revenue Service (FIRS).

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