The Senate, through its Committee on Finance, has expressed deep concern over the staggering N17 trillion loss incurred by the country due to tax waivers over the past five years.
This revelation emerged during the 2024 budget presentation of the Federal Inland Revenue Service (FIRS) to the Senate Committee on Finance.
Senator Sani Musa, Chairman of the Committee, highlighted the gravity of the situation, emphasizing the urgent need to address the abuse of tax waivers.
He urged FIRS to suspend the current system, which is prone to exploitation, and implement a more effective rebating system in its place.
Musa emphasized that while the projected total tax collection of N19 trillion for 2024 is commendable, FIRS has the potential to achieve even greater success, possibly reaching up to N30 trillion with the implementation of appropriate measures.
“The abuse of tax waivers has resulted in significant losses amounting to N17 trillion over the past five years,” Musa lamented.
“This trend cannot continue unchecked. We must suspend this practice and explore alternative solutions such as a rebating system to safeguard the country’s revenue.”
In response, the Chairman of FIRS, Zacch Adedeji, outlined the agency’s efforts to streamline the tax system and curb multiple taxation.
He revealed plans to reduce the current 62 different taxes to just eight, in collaboration with a committee established by President Bola Tinubu.
Adedeji underscored the necessity of this tax reform initiative, emphasizing that the current plethora of taxes has led to inefficiencies and contributed to the dominance of only a few taxes in revenue generation.
“We are committed to simplifying the tax system to ensure efficiency and transparency,” Adedeji stated. “President Bola Tinubu’s presidential committee on tax reforms and fiscal policy is a testament to our dedication to this cause.”
Regarding the controversy surrounding the implementation of the Tax Credit Scheme for road construction by the Central Bank of Nigeria (CBN), Adedeji maintained that the N2.5 trillion initially allocated to the scheme must be fully utilized before considering any additional funding.
“The ongoing Tax Credit Scheme for road construction is a commendable initiative, but we must ensure that the allocated funds are exhausted before seeking further investment,” Adedeji asserted. “It is essential to prioritize existing commitments and avoid overextending resources.”
As discussions continue on tax policy and revenue generation strategies, the Senate remains steadfast in its commitment to promoting fiscal responsibility and safeguarding the country’s economic interests. The scrutiny of tax waivers and the push for reform reflect a concerted effort to optimize revenue collection and foster sustainable development in Nigeria.
