The Senate’s Committee on Finance has expressed disapproval on Monday over Nigeria’s N17 trillion loss in tax waivers over the past five years. It called on the Federal Inland Revenue Service (FIRS) to suspend the tax waivers, which are allegedly being widely abused, and instead implement a rebating system.
The Senate’s stance on the misuse of tax waivers came to light during the 2024 budget presentation by FIRS to the Finance Committee. FIRS Chairman Zacch Adedeji, while projecting a total tax collection target of N19.4 trillion for 2024, insisted that the proposed N2.7 trillion Tax Credit for road construction by the Central Bank of Nigeria should be halted.
During the budget presentation, Committee Chairman Senator Sani Musa (APC Niger East) emphasized that the abuse of tax waivers had cost the country approximately N17 trillion in losses over the past five years. He urged FIRS to suspend this practice and consider implementing a rebating system instead.
Musa stated, “While your projection of N19 trillion as total tax collection for 2024 is commendable compared to the N11.16 trillion achieved in 2023, the Senate believes that more can be done, possibly up to N30 trillion, with the right measures in place.”
He continued, “The committee and the Senate, on a serious note, urge you to address the issue of tax waivers, which are largely abused and result in avoidable losses to the country on a yearly basis. Available records show that over the last five years, the country has lost about N17 trillion to tax waivers. This practice should be suspended and possibly replaced with a rebating system.”
In his presentation, FIRS Chairman Adedeji highlighted the organization’s efforts to reduce the burden of multiple taxation on Nigerians. He stated that FIRS, in collaboration with a committee appointed by President Bola Tinubu, plans to reduce the 62 different taxes currently in place to just 8.
Adedeji explained, “President Bola Tinubu has recognized multiple taxation as a significant issue and has established the presidential committee on tax reforms and fiscal policy. Currently, Nigeria has 62 types of taxes being collected. Unfortunately, less than eight of these account for 97 percent of the total collection.”
He added, “We are already in discussions with state governments on this matter. Ultimately, we aim to have no more than eight or nine taxes collected by both the state and federal governments.”
Regarding the controversy surrounding the implementation of the Tax Credit Scheme for road construction by the CBN, Adedeji insisted that the N2.5 trillion already allocated to it must be fully utilized before considering any new commitments.
