Generation of revenue in Nigeria has been a major source of concern as a result of the country’s increasing debt. It has been discovered that there has been consistent failure in the country meeting its annual revenue target since the past seven years. A report from Naira metrics has it that out of the targeted revenue of N8.1 trillion in 2021, the country could only generate N6.1 trillion. In September 2022, the total public debt of the country was an estimation of N67.6 trillion – an equivalent of 32.5 percent of GDP.
Over the years, profits made from oil have been the major source of revenue in Nigeria, however, almost all proceeds made from oil sales have been squandered on the rising subsidy payment. Reduction of oil proceeds is also owing to lack of infrastructure and underproduction as a result of pipeline vandalism (oil theft). As a result of these drawbacks, Nigeria requires more sources of revenue to serve as a supplement for the current generated revenue.
Service generated the highest revenue in Nigeria’s history in 2022.
The Federal Inland Revenue Service (FIRS) is a Nigerian agency endowed with the power of tax payment and responsible for enforcing tax compliance, registration, collection and many more. There are also agencies attached to each state for collection of taxes on behalf of the state. Adegbite & Fasina (2019) stated that taxation was not totally considered by Nigeria as a means of revenue generation in the 1980s – the period of oil exploration. The country began to consider taxation as a source of revenue in 2014 when there was global recession and there was a need to rescue states.
In 2022, it reported the generation of the highest revenue in the history of Nigeria, N10.1 trillion. A breakdown of the revenue revealed that while oil was accountable for N4.07 trillion, non-oil accounted for N5.96 trillion. However, the actual target for the year was N10.44 trillion. The Organization of Economic Co-operation and Development (OECD) stated that Nigeria’s tax-to-GDP ratio was 5.5 percent while Tunisia’s was 32.5 percent. Compared with other African countries in the report, Nigeria ranks low.
Of Nigeria’s 200 million population, only 41 million pay tax.
United Kingdom, on the other hand, was reported by the Commons Library to have generated over £915 billion from taxes and other sources in year 2021/22. The UK’s major sources of revenue were from Income Tax, Value Added Tax and National Insurance contributions (NICs) generating over £530 billion. The OECD’s reported that out of the 38 countries in 2021, the UK ranks 23 with a tax-to-GDP ratio of 33.5 percent. In 2021, USA generated $4.90 trillion in taxes, majority of which was from Individual Income Tax.
The World Bank affirmed that tax revenue that contributes 15 percent to the Gross Domestic Product (GDP) of a country is a necessary ingredient for economic growth and reduction of poverty. Nigeria is only left with exploration of tax revenue opportunities as it already has them in place. According to Naira metrics, the FIRS showed that out of the 200 million population of Nigeria, only 41 million people pay tax. Resultantly, tax revenue generation in Nigeria is significantly lower when compared with countries with lower populations.
Sensitization campaigns would help improve tax payment.
FIRS’s 2022 revenue generation revealed the feasibility of Nigeria’s reliance on taxes as a key source of revenue due to the little revenue derived from oil sales and the increasing debt of the country. The Federal Government therefore needs to ensure an increment in tax revenues across the country with enforcement of compliance. The FG with the cooperation of the FIRS and EFCC must ensure tax transparency, allowing the public access to public services made available with tax proceeds. To achieve this, the FIRS would organize sensitization campaigns for the public on the importance of tax payments and services provided by doing so.
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Nigeria’s public debt equals 32.5% of GDP – Nigeria is in dire need of more sources of revenue to meet revenue target. – Express your point of view.
Look at the ratio of our debt to revenue it is not something to write home about. Our public debt having over 30% of our GDP is really bad. We need to look out for more ways to generate revenue.
Nigeria’s public debt equals 32.5% of GDP. With all this debt government is not showing concern at all. Bad and failed government
With the decline experienced in the oil sector the country has really recorded a huge set back. Our government needs to speed up the move to diversify the economy and regulate the economy.
It is safe to say that the country has taken a major setback due to the oil industry’s downturn. The government should hasten the process of economic diversification and regulation.
Its not surprising it has been discovered that there has been consistent failure in the country meeting its annual revenue target. What do you get from a corrupted country. I pray God uses the upcoming election to revamp the country and clear out under performing positions.
As a direct result of the country’s ever-increasing debt, Nigeria’s ability to generate revenue has become a major source of concern in recent years.
It’s hardly shocking that year after year, the country has failed to fulfill its revenue goal. You get nothing good out of a corrupt nation.
Over the course of its history, Nigeria’s primary source of national income has been the income it derives from oil sales.
As a consequence of these deficiencies, Nigeria is in need of additional sources of money to serve as a supplement to the revenue that is already being created.
In other to clear our debt we need to find how to generate more revenue in other to make things balance we need to start reducing our debt and later not to be borrowing much money if our revenue is more
The decline in oil revenues is also attributable to a lack of infrastructure as well as an underproduction that is caused by the destruction of pipelines.
The Federal Inland Revenue Service is a government organization in Nigeria that is tasked with the responsibility of ensuring tax compliance as well as the authority to collect taxes.
The FIR would educate the general people on the significance of making tax payments and the benefits that come from doing so through awareness programs that they would arrange.
If our revenue is more than our expenses, we will be able to pay off our debt and avoid borrowing money in the future, bringing our financial situation back into balance.
The Federal Inland Revenue Service conducted a revenue generation study in 2022, and the results showed that it would be possible for Nigeria to rely on taxes as a primary source of cash. This is because oil sales generate very little revenue, and the country’s debt continues to grow.
When you have bad governance, you should expect mismanagement of fund. As the saying goes a bad workman always blames his tools. That is exactly what is going on in this administration. Our debt is on the rise and our government kept on mismanagement funds.
Nigeria’s public debt as gone to 32.5% of GDP? This is not good for any country. What is Government doing about it?
Nigeria needs other revenue streams in order to augment the current revenue earned as a result of these limitations.
It is safe to assume that the decline of the oil industry has been a significant setback for the nation. The process of economic diversification and regulation should be accelerated by the government.