Senate: Nigeria Lost N17tn toTax Waivers in 5Years
FIRS seeks lawmakers’ support to terminate N2.7tn fresh tax credit scheme Agency defends budget, projects N19tn total tax collections for 2024
The Senate, yesterday, described as unfortunate and totally unacceptable the N17 trillion that the country lost to tax waivers extended to some individuals and corporate establishments in the last five years.
The upper chamber urged the Federal Inland Revenue Service (FIRS) to suspend any form of tax waivers and replace it with the rebating system.
The senate objected to the alleged abuse of tax waivers when the management team of the FIRS, led by its Chairman, Zach Adedeji, defended the agency's 2024 budget before the Committee on Finance, chaired by Senator Sani Musa.
Adedeji projected N19 .4 trillion as the agency's targeted total tax collection for 2024. He urged the senators to support his position that the fresh N2 .7 trillion tax credit planned for road construction in the country by the Nigerian National Petroleum Company Limited (NNPCL) be stopped.
Musa agreed with the FIRS boss that the tax waivers should be suspended and replaced with the rebating system.
He said, "Your (FIRS) projection of N19 trillion as total tax collection for 2024 is good when compared to N11.16 trillion achieved in 2023, but the senate believes that you can do more even to the tune of N30 trillion if required measures are put in place.
"As impressive and encouraging the performance and projections of FIRS are under your leadership, this committee and by extension, the senate, on a serious note, urge you to look at the direction of tax waivers largely being abused with attendant and avoidable losses being incurred on yearly basis.
"Available records show that within the last five years, about N17 trillion have been lost by the country to tax waivers.
"It should be suspended and possibly substituted with rebating system."
The FIRS chairman informed the committee that the FIRS, in collaboration with the committee set up by Tinubu, would reduce the 62 different taxes being collected at the federal and sub-national levels to eight.
He said doing so would reduce burden on Nigerians and tackle the current food crisis being experienced in Nigeria.
Adedeji said, "President Bola Tinubu has seen the issue of multiple taxation as a pool of problems that is why he set up the presidential committee on tax reforms and fiscal policy.
"The mandate he gave to the committee was that they should work on only one digit tax. As of today in Nigeria, we have 62 types of taxes being collected.
"The sad news about that is that less than eight out of the entire 62, accounted for 97 per cent of the collection.
"So, the others are just constituting problems. However, because we run a federation and we have laws, anything that has to do with motor parks and road taxes among others, are under the purview of the state.
"We are already consulting and engaging the state government on it. We have also demonstrated to them that when we want to move all those taxes especially the ones that led to increase in food prices to the centre.
"There is a report that when food items are moved from the north, before it gets to the south, they pay more than 40 types of taxes.”
He added, "That's part of the reasons food prices are increasing in Nigeria. The most unfortunate thing about this is that most of those taxes are not well coordinated and were not being accounted for.
"It is just creating problems for us so we are working through the joint tax board to make sure that we harmonise and let the states see that such tax is given us problems.
"We are also awaiting the report of the committee set up by the president to actually harmonise all the taxes.
“At the end of the day, we won't have more than eight or nine taxes that the state and federal government would be collecting."
On the controversy trailing the implementation of tax credit scheme for road construction by CBN, the FIRS boss insisted that the N2.5 trillion earlier committed to it must be fully implemented before thinking of any fresh one.
He said, "Regarding tax credit, what I said was that the programme is laudable, but that the N2.5 trillion being spent on it by NNPCL should be exhausted before bringing fresh request.