The Federal Government is seeking major reforms of the nation’s tax system and hopes to strengthen fiscal institutions including a name change for the Federal Inland Revenue Service (FIRS), and there are fears of the possible slamming of new taxes on Nigerians. But the government should be given the benefit of the doubt, writes Joy Gyakyor.
It was Benjamin Franklin, an American leading writer and scientist, known as the founding Father of the United States who once said; When you are finished changing, you are finished. Indeed, striving to move beyond the fear of uncertainty and making change works for any society that strongly desires growth and development.
Change, in an organization such as the Federal Inland Revenue Service (FIRS) remains inevitable – with reforms often designed to test new approaches that could guarantee effective service delivery to millions of customers local and foreign.
Only recently, President Bola Tinubu transmitted four Tax Reform bills to the National Assembly for accelerated consideration and passage into law, one of them aimed at repealing the FIRS Act and establishing the Nigeria Revenue Service (NRS) Act in its place.
The other bills are the Nigeria Tax Bill 2024, which is expected to provide the fiscal framework for taxation in the country, and the Tax Administration Bill, which will provide a clear and concise legal framework for all taxes and reduce disputes. The fourth is the Joint Revenue Board Establishment Bill, which is expected to create a tax tribunal and a tax ombudsman.
The process of name change has been on board since 2022 but did not receive the speedy political will of support being witnessed under the present administration of President Tinubu. This level of renewed vigor is understandable because the government is committed to ensuring ease of doing business, transparency, and efficiency in revenue collection.
As presently being championed by the Executive Chairman of the FIRS Dr. Zacch Adedeji, the government is worried that the problem of multiple taxation is fast reducing the level of trust and compliance among taxpayers in the country. According to Dr. Adedeji, the President Tinubu administration intends to “let the poor breathe” while taxing ‘prosperity’ and ‘fruits’ not ‘seeds.
President Tinubu during his 2024 Independence Day broadcast also expressed the administration’s commitment to review all complaints about multiple taxation and various anti-investment inhibitions. A transition into the NRS therefore targets to assist in consolidating revenue collection to one government agency.
While appearing before the House of Representatives Committee on Finance, the FIRS chief executive argued that the current name of the top tax agency does not reflect its true function and limits the power of the organization to carry out functions.
The bill proposing to rename the FIRS is part of the many reform promises of the tax zar when he took over the helm of affairs of the agency aiming to transform its tax system to support sustainable development and achieve a minimum of 18% tax-to-GDP ratio within 3 years without stifling investment or economic growth.
Despite fears expressed in many quarters that the tax reforms are tailored towards introducing new taxes in the country, Dr. Adedeji insists that there is no cause for any alarm. “Tax reform laws will not introduce any taxes or increase the percentage of existing ones but reduce the number of taxes being paid by Nigerians,” he told a committee of the Senate recently in Abuja.
It is important to understand that the FIRS name change is only a holistic government interventionist approach under the Accelerated Stability and Advancement Plan (ASAP) already approved by the Federal Executive Council (FEC) as contained in the recommendations of the Presidential Fiscal Policy and Tax Reforms Committee.
The ESB seeks to amend about 15 different tax, fiscal, and establishment laws to facilitate economic stability and set the country on the path for sustained inclusive growth.
According to the Minister of Finance and Coordinating Minister of the Economy, Wale Edun, the measures listed in the ESB have the potential to bring in funds from international money transfer organizations, enhance foreign exchange transactions, and open up employment opportunities for Nigerians with specialized skills.
In pointing out some loopholes in the current name of the FIRS, Dr. Adedeji told the Nigerian parliament that the “federal” and “inland” in the current name limit the powers of the commission. He explained that the agency currently collects money for the federal, state, and local governments with VAT collection and so, need not be limited in its nomenclature with the word ‘federal’.
This is the same with the word ‘inland’. The nation’s top tax agency equally collects funds outside the shores of the country – like from Amazon, Google, and many others. This is an obvious reason the word ‘inland’ does not fit in the agency’s name since it connotes as though it only collects revenue within Nigeria.
Those criticizing the proposed name change of the FIRS and raising fears about the introduction of further taxes in the country need to come to terms with the fact that the current operational name of the nation’s top tax agency sufficed at the time it was established, but does not reflect today’s reality when the commission now collects VAT with 85 percent of this revenue going to the States.
The National Assembly appears ready to support the Federal Government in many of the proposed legislative adjustments targeting the repeal of obsolete tax laws and the re-enactment of new ones in line with current global trends.
Since President Tinubu himself has assured that all of these steps are only aim to strengthening Nigeria’s fiscal institutions and fostering a more effective and transparent fiscal regime, the government should be given the benefit of the doubt that the reforms truly will at the end, serve the progressive interest of millions of Nigerians.
