Zacch Adedeji And The 2024 Tax Revenue Target
By: Nicholas Dekera
Reactions have continued to greet revelations that the Federal Inland Revenue Service (FIRS) under the leadership of Zacch Adedeji generated a whopping ₦12.3 trillion in 2023. This amounts an almost 20% increase in the ₦10.1 trillion recorded for 2022 – an unprecedented receipt at the time. Of the ₦12.3 trillion, contributions from the non-oil sector increased by 54% compared to 2022 continuing a strong trend of tax receipts from non-oil sectors. The ₦9.2 trillion contributed by the non-oil sector is almost the size of the entire tax generated in 2022.
Above is the result of Adedeji’s reforms since taking over from his predecessor. From very friendly tax approaches that include waiving accumulated fines for tax defaulters while increasing engagements with the tax paying public to timely customer service engagements, everything Adedeji has introduced appears to be delivering the goods. This among other approaches have expanded the tax net which naturally culminated in this improved tax income generation. But it goes beyond just the taxes. Zacch Adedeji through his public engagement has awaken the patriotism of Nigerian taxpayers as many now look forward to offsetting their tax obligations without the hitherto push and shove that characterized tax collections.
But while Nigerians are still marvelling at the ₦12.3 trillion generated in 2023, Mr. Adedeji has set a high bar for 2024, pegging the target for this year at ₦19.4 trillion. Whereas the audacity to set a tax collection target that amounts to some 35% increase continues to raise eyebrows, the FIRS chairman seems unperturbed as he reels out the strategy for achieving that target.
First, he will develop proactive engagements by establishing regular communications with the taxpaying public. This strategy worked wonders in the previous year and is integral to the giant leap in tax receipts recorded for 2023. So, no surprise that he’s deploying a working formular which I expect would have been fine tuned to reflect the peculiarities of the current tax environment and fiscal policies that have a direct bearing on the mandate of the tax collection agency.
The decision to provide “customized services that address the unique needs of large taxpayers and key sector contributors” is also a smart one. Let’s face it, giving large taxpayers preferential treatment in terms of customer service and other incentives guarantees you hassle free transactions, leaving you sufficient time to go after other potential tax sources. It makes sense not to stress committed customers with unnecessary bottlenecks while the real work lies elsewhere. So, this is wise counsel indeed.
Another strategy that Adedeji hopes will help deliver the year’s tax target is “improved service delivery, expansion of the tax net and enhanced compliance measures by improving enforcement activities in line with relevant laws, and increased collaboration with strategic stakeholder”. An expanded tax net has been integral to the trend of increased tax collections over the years. Yet, data shows that Nigeria is yet to fully harness the tax space, the implications of which include the subsistence of a wide berth of untaxed persons and businesses. It is therefore the potential from this tax sources that is giving the chairman the confidence of achieving the 2024 target. This is so, especially considering the resolve to increase not just collaboration with strategic stakeholders but also a full throttle enforcement of compliance with relevant tax laws.
The best part of Adedeji’s plan is to improve tax collection effectiveness, prevent leakage and waste rather than increasing tax. Accordingly, the plan is to “tax prosperity and not poverty”. What this means is that, although the plan is to rejuvenate the economy using tax income, the goal is not to push more Nigerians into hardship by deploying an inflexible tax regime. The focus, therefore, is to “have that viable structure to aid effective collection and development”.
From his speech at the strategic management retreat organised by the FIRS in Abuja, a major plank of Zacch Adedeji’s tax revenue target for 2024 is the formalisation of the so-called informal sector. The fact remains that there are so many unregistered businesses in Nigeria that are simply enjoying services and infrastructure provided using taxpayers’ money but are not contributing to the pool. Therefore, the plan to first formalise the informal sector, make government accountable to them by providing them with valuable capacity building training before taxing them is absolutely remarkable.
It must be said that by approving a new organisational structure which aims at improving the efficiency and effectiveness of the operations of the tax collection agency, the Federal Government is making a strong commitment towards giving FIRS all the official support to succeed in its quest to rejuvenate the economy. In this regard, embracing an integrated tax approach that leverages technology is indeed revolutionary and in line with global best practices.
The new tax system which looks to tailor “services to specific segments and aims to simplify the taxpayer experience” will no doubt remove complexities, unnecessary overlaps while creating a seamless and user-friendly interactions for every taxpayer. This new system ensures that taxpayers are guided and serviced according to their specific needs, thereby eliminating confusion and redundancy in tax administration.
The Zacch Adedeji magic of 2023 is under threat of being undone this year. And from what we have seen by way of new plans and approaches, it will be very hard to find anyone who will bet against him meeting and even surpassing the 2024 target. As appointments go, Adedeji fits the description of the proverbial square peg in a square hole. No wonder, he is one of the most visible operatives of the Renewed Hope government of President Tinubu with his membership of virtually every committee worth its name in this administration.
Dekera is a public affairs commentator, he writes from Kaduna
