Mohammed Nami, executive chairman of the Federal Inland Revenue Service (FIRS), says taxes now account for 70 percent of Nigeria’s revenue.
Nami told stakeholders at an interactive session in Abuja that other revenue lines, including crude oil, accounts for the remaining 30 percent.
Delivering a presentation titled ‘Weathering Economic Turbulence’, the FIRS boss called for a review of the country’s tax laws, saying most of the laws dates back to before independence in 1960.
According to Nami, the total revenue available to the federation accounts allocation committee (FAAC) in June 2020 was N696 billion (about $2 billion), “which is equivalent to what a county in the United States spends”.
“Nigerian economy is projected to contract by over five per cent in 2020 due to COVID-19 and other disruptions. Oil prices have plummeted (from $97.98 in 2012 to below $50 in 2020),” he said.
“Collection has indeed gone up, but Nigeria’s VAT gap remained at a pitiable 70 percent, compared with South Africa at 12 percent, Morocco at 28 percent, and Zimbabwe at 38 percent.”
Explaining that Nigeria’s tax-to-gross domestic product (GDP) ratio is currently at six percent, he said the World Bank recommends a minimum tax to GDP ratio of 15 percent for economic growth and poverty reduction.