Given the world’s strive to ensure economic growth and development, generation of revenue through tax collection has increased as an alternative and sustainable means of funding major infrastructural projects across the world. The negative economic effects of the COVID-19 pandemic, the Russian-Ukraine war and natural disasters have greatly contributed to this increase. These factors among others have heightened the roles of taxes in sustenance of developmental projects mostly in underdeveloped countries like Nigeria that require a regular flow of income to fund public investments and social programs.
Minister of Works and Housing, Nigeria, Babatunde Raji Fashola, stressed the need for Nigeria to employ tax revenue for sustenance of infrastructural projects, expressing the fact that a contractor handling any developmental project can only be paid by the government if there is availability of money. Two recurrent recessions in less than a decade has almost led the country into economic stagnation, fostering more borrowing from diverse sources. These borrowings has led the country to own a debt portfolio of over N77 trillion.
FIRS commendably reduced funding gap in the country.
To salvage this situation, there was an establishment of Federal Inland Revenue Service (FIRS). The service, despite the economic downturn caused by the COVID-19 pandemic, has been able to contribute significantly to the nation’s Gross Domestic Product (GDP). During the regime of Muhammad Nami, FIRS commendably reduced the funding gap through provision of required resources to enable sustenance of government programs, payment of salaries and execution of major infrastructural projects. In 2021, across the N6 trillion threshold, the service hit a tax collection record of N6.41 trillion.
In 2022, FIRS increased its contribution to the nation’s GDP, contributing N10.1 trillion in tax revenue. The efforts of FIRS has helped the speedy recovery of the country from the impacts of the COVID-19 pandemic. Tax revenue is a catalyst that drives human capital development through projects. In Nigeria’s Tertiary Education according to the Vice Chancellor of Bayero University Kano, Prof. Sagir Adamu Abbas, there was an approval of N12 billion by the Tertiary Education Trust Fund (TETFUND) to establish 12 research centers in Nigeria’s six geopolitical zones to achieve improved capital development.
2.5% of Nigerian-registered firms’ profit from Education Tax.
Prior to this moment, many public institutions in Nigeria had poor infrastructure that deprive them of conducive learning environments; a result of inadequate funding. Mitigation of this situation was achieved through the Education Tax — 2.5 percent of company’s profit imposed on every Nigerian registered firm. The Executive Secretary of TETFUND, Sunday Echono, stated that in the last three years, the Fund has spent over N2 trillion to finance infrastructural developments in federal universities, polytechnics and colleges of education.
Vice Chancellors, Provosts and Rectors of public tertiary institutions across the six geopolitical zones in the country have affirmed the tremendous impacts of the Education Tax funds collected by FIRS in human capital development, infrastructural development and research in respective institutions. The Provost of Federal College of Education Abeokuta, Dr. Rafiu Adekola Soyele, asserted that the college has since 2011 benefitted immensely in aspects of facility and capacity building for staff, infrastructure, non-teaching staff and more. With this, he greatly applauded the government for its support.
The service will maintain and improve the momentum this year.
FIRS, considering the efforts put into ensuring availability of funds in diverse sectors of the economy, asked that the resources as judiciously implemented by the government at all levels so as to encourage citizens to adhere to their tax obligations. The FIRS boss, Nami, believes that the service is yet to attain all the feats there is in tax collection enhancement. Therefore, he affirmed that the service is focused on maintaining and improving the momentum this year. Identification of more areas where there can be improvement in collection delivery and efficiency amidst deployment of innovative data and artificial intelligence is its main goal.
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