By Ikechukwu Samuel
The Executive Chairman of the Federal Inland Revenue Service (FIRS), Dr. Zach Adedeji, has said Nigeria’s tax reforms are designed to expand economic prosperity rather than increase the burden on poor Nigerians.
He said the Federal Government’s revenue strategy was not based on extracting more money from citizens but on creating conditions that would enable businesses and individuals to become more productive.
Speaking on a live television on Sunday, the FIRS chairman said the philosophy guiding the administration’s tax policy was to ensure that government revenue grows alongside the prosperity of taxpayers.
“If you remember Mr. President’s speech, that I am to tax prosperity, I don’t want to tax poverty. I am to tax the fruits, not the seed. And I’m to tax the return, not investment,” Adedeji recalled.
He explained that the revenue service had a direct interest in ensuring that businesses succeed because government revenue increases when taxable economic activity expands.
According to him, a business generating N100 would produce N30 in tax under a 30 per cent tax assumption, while a business generating N200 would produce N60.
“If I want to make more, I must work for you to make more,” he said.
Adedeji argued that the approach makes economic expansion a shared interest between businesses and the revenue authorities.
“That is why it is in the best interest of us in Nigerian Revenue Service, that businesses are doing well, individual are doing well,” he said.
He said the Federal Government’s efforts to remove obstacles confronting businesses were therefore part of a broader revenue strategy rather than simply an attempt to increase taxation.
Adedeji also rejected concerns that poor Nigerians could become heavier targets under the tax reforms.
“I said it publicly, we are not here to tax poverty. We are here to tax prosperity,” he said.
He added that the responsibility of the revenue authorities was to create an environment in which Nigerians could prosper and thereby expand the country’s taxable economic base.
The FIRS chairman also placed considerable responsibility for poverty reduction on state governments, arguing that they are closer to citizens and have direct responsibilities in areas that affect human development.
According to him, education is one of the strongest tools for moving people out of poverty, particularly at the kindergarten, primary and secondary levels.
“These are responsibility of state government,” he said.
Adedeji therefore argued that increased allocations to states should be accompanied by effective utilisation of resources because state governments are closer to the people who require public services.
He explained that much of the revenue being generated is federation revenue rather than money belonging exclusively to the Federal Government.
For instance, he said, 90 per cent of Value Added Tax goes to the states.
“The revenue we presented is federation revenue, not Federal Government revenue,” Adedeji said.
He also rejected the suggestion that increased revenue automatically meant that every government expenditure should immediately increase.
According to him, budgeting, funding and financing are distinct processes that should not be treated as the same thing.
“There is total difference between budgeting system and expenditure framework,” he said.
He explained that some major infrastructure projects operate through funding structures involving government contributions and private-sector financing.
Adedeji cited the Lagos-Calabar Coastal Highway as an example, saying government funding arrangements could involve the contractor sourcing additional funds.
He argued that the viability of the Nigerian economy had made it possible for investors to show greater interest in financing major infrastructure projects.
The FIRS chairman also linked increased government revenue to infrastructure and productive activities, citing investments in agriculture, the Bank of Agriculture and the Bank of Industry.
“When you ask where the increased revenue is going, is going into a structure with productive activities of government,” he said.
He further identified electricity as a critical component of Nigeria’s economic productivity, noting that the country’s inability to produce enough of what it consumes has remained a major structural weakness.
According to him, electricity is central to industrialisation and productivity, making power-sector reform an important part of the government’s economic strategy.
Adedeji also argued that revenue growth should be viewed as evidence of Nigeria’s untapped economic capacity.
“Simple mathematics and simple economics tells you that once you have the numbers, it means something – productivity. It means something more earnings, more revenue,” he said.
He maintained that stronger economic activity should ultimately translate into better infrastructure, healthcare and other public services.
The tax chief’s argument therefore presents the administration’s revenue policy as a cycle: government creates an environment for businesses to expand, businesses generate greater economic activity, and the resulting prosperity enlarges the country’s tax base.
For Adedeji, the objective is not simply to collect more taxes from Nigerians but to create a larger and more productive economy from which sustainable public revenue can be generated.
