For the Federal Inland Revenue Service, FIRS, a 41 million base of taxpayers out of a population of over 200 million people is far below satisfactory but what is more, displeasing to the tax umpire is the ever-dwindling compliance rate.

In a recent presentation tagged ‘Public Presentation and Breakdown of the Highlights of the 2022 Appropriation Bill, Muhammad Nami, the FIRS boss had juxtaposed the Nigerian tax system with its South African counterparts. By his presentation, South Africa with a taxpayer base of just 4 million, generated in 2020 a whopping ₦13trn from Personal Income Tax alone with Nigeria earning about ₦400bn during the same period.

It is important to state that South Africa only boasts of a population strength of about 60 million people while Nigeria’s population is currently estimated at over 200 million.

The FIRS boss explaining how the economy can be diversified as the focus of the 2022 budget proposal tagged ‘Budget of Economic Growth and Sustainability’ highlighted the need for Nigeria to do better as the number of billionaires in Lagos alone are more than the number of billionaires in the whole of South Africa but yet the country’s tax fortune continue to drop.

It is important to note that PIT which raked about ₦13trn for the South African government is domicile within states in Nigeria

2021 so far

Recall that for the 2021 fiscal year, FIRS had projected ₦10.1 trillion tax collection but giving a scorecard on the journey so far as September 31st, 2021, the FIRS reveals it has generated about ₦4.2 trn.

As a breakdown of this amount, oil-related taxes accounted for only 22 percent which is ₦950bn only, the non-oil taxes also contributed ₦3.3trn.

What the FIRS boss is saying,

 “If you also compare that with our brother South Africa where they have a total population of about 60 million people, with just 4 million taxpayers, the total personal income tax paid in South Africa last year is about ₦13trn. You can now see that these things are not adding up.

“The number of billionaires in Lagos alone is more than the number of billionaires in the whole of South Africa but yet what we generated as Personal Income Tax by Lagos State Government is just just less than ₦400bn.

“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.”

 “To address the issue of Nigeria not diversifying its economy, from a tax perspective, you will discover that we are diversifying the economy.

“The total collection we have up to 31 September which we have not fully reconciled with the CBN and the Nigerian Customs is about ₦4.2trn, and from this amount, oil-related taxes accounted for only 22 percent which is N950bn only, the non-oil taxes we have generated within that period is ₦3.3trn.

“Secondly, 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 people are appointed as an agent of collection, whatever they have collected one half of government they find it difficult to remit.

“When you compare Nigeria as an oil-producing country to a small country of Saudi Arabia that the Honourable Minister (of Finance)has pointed out, 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. We have an issue to discuss and to talk about how to solve our problems.

“If you look at it from the rate of taxes paid, In Saudi Arabia with a population of ten million people, the VAT rate is as high as 15 percent and what we have in Nigeria is just 7.5 percent.”

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