Nigeria Aims for N19.4tr Tax Revenue Increase in 2024
By Patience Ikpeme
The Nigerian government is eyeing a significant boost in tax revenue for 2024, setting a formidable target of surpassing N19.4 trillion for the year.
This ambitious objective marks a substantial 60 percent surge from the N12.32 trillion collected in 2023, forming a crucial part of a broader strategy to elevate the government’s overall revenue as a percentage of GDP to 25 percent.
In 2023, the tax revenue target was N11.558 trillion, but N12.32 trillion was generated comprised of Oil Revenue at N3.17 trillion, constituting 25.6 percent of the total, and Non-Oil at N9.2 trillion, making up 74.4 percent of the total.
The projected 2024 revenue surge hinges on key assumptions, including a stable crude oil price of $77.96 per barrel, daily production of 1.78 million barrels, an exchange rate around N750 per US dollar, and unchanged tax policies.
The rationale behind this ambitious target arises from the acknowledgment that Nigeria’s current tax-to-GDP ratio lags behind many African countries, not to mention developed nations. Minister of Finance and Coordinating Minister for the Economy, Wale Edun, highlighted this, noting, “Ours is still around 10 percent of GDP. At the highest level, it goes to about 55-60 percent, where the government really has a lot to spend to provide social services as well as basic infrastructure.”
To realize this ambitious goal, the government adopts a two-pronged approach. Firstly, it commenced direct revenue collection from January 2nd, 2024, leveraging advanced technology and improved methodologies from Government Owned Enterprises (GOEs), aligning with the global trend of prioritizing domestic resource mobilization over debt.
Secondly, the government aims to substantially increase revenue from government-owned enterprises. Mandated to spend only 50 percent of their earnings, the remaining surplus contributes to the Consolidated Revenue Account (CRA). The Finance Minister urges compliance with regulations and the Fiscal Responsibility Act for effective implementation.
Despite the ambitious goals, challenges loom. Efficient collection processes, minimizing leakages, and maintaining public trust are pivotal for long-term success. The Finance Minister acknowledged these challenges, stating, “People in Nigeria, taxpayers, the general public, what they want to see is that their money is faithfully collected as it should be and properly spent and accounted for with minimal excess waste and leakage.”
Beyond tax collection, the government recognizes the importance of fostering economic growth and formalizing the informal sector. FIRS Chairman, Zacch Adedeji, emphasized, “We are going to tax prosperity, not poverty. We are going to focus on the fruit and not the seed,” stressing the need to create a thriving economic environment to naturally generate higher tax revenue.
The focus is on expanding the tax base by formalizing the informal sector. Initiatives like mandatory National Identification Number (NIN) registration aim to identify potential taxpayers, facilitating their transition into the formal economy. This process extends beyond taxation, including skill development and registration support to empower and integrate informal businesses into the mainstream system.
Adedeji outlined the shift from functional or unit-type tax to a customer-centric approach, creating a one-stop-shop for taxpayers. This restructuring aims to streamline processes, enhance expertise, and drive voluntary compliance, with consequences for non-compliance being a focal point. Adedeji emphasized, “Our duty is to provide an effective tax collection system; we are not a revenue-generating agency but a revenue-collecting agency.”
