Many Nigerians have been waiting with bated breath to see whether the Lagos State model of taxing businesses and individuals will be replicated nationwide. Zacch Adedeji, Chairman of the foremost tax agency in Nigeria, says the president is desirous of lessening the tax burden.

One of the less pleasant epithets that trails President Bola Tinubu is ‘the taxman’ personality, gotten from his time as Lagos State governor. From paying little to no tax before his time as the state’s chief executive, businesses and individuals saw their tax burden go up, and there was no way of evading the taxes.

ROI on Taxes paid = Investment in National Prosperity.#SimplifyingTaxMaximisingRevenue pic.twitter.com/NSXNRFn48O

— Federal Inland Revenue Service NG (@FIRSNigeria) August 5, 2024

It must have come as a huge relief when Zacch Adedeji, Chairman of the Federal Inland Revenue Service (FIRS), told members of the Senate Committee on Finance that there would be no new taxes imposed on Nigerians under the tenure of the ‘tax man’. Indeed, the chief tax officer of the country said the tax burden, which was borne disproportionately by people in the lower echelons of the society, would be eased.

Tax reform bills will not introduce taxes or increase [the] percentage of existing ones, but reduce the number of taxes being paid by Nigerians. No agency will be merged in the process of carrying out the reform and no job will be taken from anybody. The tax reform seeks to increase [the] simplicity and efficiency of tax administration in Nigeria, Mr. Adedeji assured members of the senate committee, who would gladly take the message back to their constituents.

One of the major objectives of the current administration is reforming Nigeria’s haphazard tax system, which creates room for many loopholes. People who should pay taxes based on their earnings usually evade paying, while the people who are at the mercy of government agencies bear the brunt of payment.

Even the accrued payment ends up in private pockets more often than not. The government is, therefore, proposing four bills to clean up and modernise Nigeria’s tax system.

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The bills include Nigeria Tax Bill, Nigeria Tax Administration Act (amendment) Bill, Nigeria Revenue Service Bill and Joint Revenue Board (establishment) Bill. Adedeji said the passage of the bills would help to harmonise the multiple tax laws in the country.

They (the bills) will drive efficiency and modernisation, simplify tax laws and ensure synergy among [the] agencies involved. The bills will also increase efficiency and effectiveness in government savings, promote transparency and integrity in revenue collection, align with international standards and broaden Nigeria’s tax base, said the tax administrator.  

Two years ago, Adedeji’s predecessor, Muhammad Nami, said only 41 million Nigerians pay taxes out of the over 200 million population in the country. Despite this, Nigeria earned far less from personal income tax (PIT) than its counterparts across Africa.

If you also compare that with South Africa where they have a total population of about 60 million people, with just 4 million taxpayers, the total personal income tax paid in South Africa last year was about N13 trillion. You can now see that these things are not adding up. The number of billionaires in Lagos alone [is] more than the number of billionaires in the whole of South Africa but yet what we generated as PIT by Lagos State was low, lamented the erstwhile tax agency chairman.

Should Nigerians expect more taxes and frequent changes to the tax laws?

“We do not intend to introduce new taxes or impose higher tax rates. Rather, our mandate is to reduce the number of taxes and levies while harmonising revenue collection to reduce the burden on the people… pic.twitter.com/fCFStLl6Tb

— Presidency Nigeria (@NGRPresident) September 10, 2023

Many analysts have linked the high rate of tax avoidance, particularly by those who ought to pay to the huge trust deficit that exists between the government and the governed. With the high level of corruption in government spending, citizens are wary of contributing to the bottomless pit public funds disappear into. 

Adewole Ojo

Adewole Ojo is the Editor-in-Chief of Meiza Nigeria. He can be reached on adewole.ojo@fourpoints.ng.