In a statement by the Federal Inland Revenue Service, Nigeria has generated N4.2 trillion revenue so far this year. This is about N3.3 trillion, that is over 77 per cent of the total collection, came from the non-oil sector.
FIRS Chairman, Muhammad Nami, stated that “to address the issue of Nigeria not diversifying its economy, from a tax perspective, you will discover that we are actually diversifying the economy”.
He argued that the diversification, though a work in progress, was on course.
According to Nami, “the total collection we have up to 31 September, which we have not fully reconciled with the CBN and the Nigerian Customs is about N4.2 trillion, and from this amount, oil related taxes accounted for only 22 percent which is N950 Billion only, while the non-oil taxes we have generated within that period is N3.3 trillion”.
Nami noted that though the potential of the country’s non-oil revenue was being harnessed, it was, however, not adequate.
He lamented that the taxes being paid in Nigeria were inadequate. According to him, “to discuss the taxes that are being paid in the country and to say whether they are adequate or not, I want to believe one, they are not adequate”.
“People are not willing to pay even when they are appointed as agents of collection; whatever they have collected on behalf of the government, they find it difficult to remit. When you compare Nigeria as an oil producing country to a small country like Saudi Arabia, we are still not there.
“We assume that we are a rich country, I don’t think that is correct. We only have the potential to be rich, because we have a very huge population of about 200 million.
“Saudi Arabia with a population of about 35 million has an oil firm, ARAMCO that raked in $49 billion in profit in 2020. At our official rate, that is roughly about N20 trillion in profit; more than the total budget sum for 2022 that was submitted by President Muhammadu Buhari.
“Despite the above statistics, Saudi Arabia still earns revenue from several other sources, including religious tourism and Value Added Tax, which is as high as 15 per cent, as against Nigeria’s 7.5 per cent.” Nami stated.
The FIRS chief emphasised that the best way to fund budgets globally was through payment of taxes by citizens, particularly personal income tax which is a direct tax as against indirect taxes; he further noted that personal income taxes in other countries account for over 50 per cent of the funds available to their respective governments for funding expenditure.
“Our total tax payers is in the region of about 41 million people and the total personal income tax paid last year was less than N1 trillion by 40 million people.
“If you also compare that with our own brother South Africa where they have a total population of about 60 million, with just four million taxpayers, the total personal income tax paid in South Africa last year is about N13 trillion. You can now see that these things are not adding up.
“The number of billionaires in Lagos alone are more than the number of billionaires in the whole of South Africa, yet what Lagos State generated as Personal Income Tax was just less than 400 Billion in 2020.
“So, if we don’t pay these taxes, there is no way the government will be able to provide the social amenities required, the critical infrastructure required for the wellbeing of the country,” Nami stated.