Unlocking Nigeria’s Fiscal Future Through Tax Reform By Abdullateef M Awal
In the complex arithmetic of national development, taxation is more than just revenue; it is the lifeblood of public services and a barometer of the social contract between a government and its people. Nigeria, facing the urgent need to diversify its revenue streams away from volatile oil profits, has long recognised this truth. Yet, the nation’s struggle to build an efficient, transparent, and compliant tax system persists. The problem is not a lack of effort, but a fundamental flaw in design: a chronically fragmented administration.
We have built a labyrinth of agencies—the Federal Inland Revenue Service (FIRS), the Nigeria Customs Service (NCS), the Corporate Affairs Commission (CAC), and numerous State Internal Revenue Services (SIRS)—each operating in its own silo. While their mandates are distinct, their functions inevitably overlap, creating a system where duplication is the norm and collaboration is a constant battle. In an era of dwindling petrodollars, fixing this structural weakness is not just a matter of administrative tidiness; it is the key to unlocking Nigeria’s fiscal resilience.
The rationale for breaking down these silos is compelling. Imagine a system where the CAC, upon registering a new business, automatically triggers its enrollment in the national tax database. Envision the FIRS and the Nigerian Financial Intelligence Unit (NFIU) cross-referencing data to spot glaring discrepancies between declared incomes and lavish lifestyles. This is the power of collaboration: it transforms isolated data points into a coherent narrative of a taxpayer’s obligations, closing the gaps through which billions of naira in potential revenue currently escape.
The effects of such synergy are transformative and manifest in three critical areas:
First, enhanced data integration builds a foundation of trust. A unified system, anchored by a robust Tax Identification Number (TIN), ends the era of the “ghost taxpayer” and the “invisible enterprise.” When agencies share a single source of truth, the integrity of the entire system improves. This reliable data is the bedrock of evidence-based policymaking, allowing the government to craft tax laws that are not only equitable but also grounded in the reality of the economic landscape.
Second, coordinated enforcement becomes a powerful deterrent. Tax evasion often thrives in the shadows between agencies. A business might under-declare its income to the FIRS while its import records with the Nigeria Customs Service tell a different story of high-volume trade. When these agencies operate in concert, facilitated by bodies like the EFCC, these inconsistencies are illuminated. This creates a formidable front against non-compliance, protecting the nation’s coffers and ensuring that the burden of taxation is shared fairly.
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Third, policy coherence ensures reforms are practical and impactful. Too often, well-intentioned tax policies fail at the implementation stage because the agencies responsible for executing them were not adequately consulted. Collaborative platforms, such as inter-agency task forces, ensure that the practical insights of frontline administrators are baked into policy from the start. This prevents the creation of elegant but unworkable laws and ensures that reforms are efficient and effective from day one.
However, the path to this collaborative utopia is strewn with obstacles. Deep-seated institutional rivalries and turf protection often stifle cooperation. Outdated and incompatible digital infrastructure makes seamless data sharing a technical nightmare. Moreover, the legal and regulatory frameworks that should mandate and facilitate this cooperation are often weak or non-existent.
To crack this code, Nigeria must adopt a deliberate and sustained strategy built on three pillars:
1. Mandate Integration by Law. The government must move beyond encouraging collaboration to legally mandating it. The recently enacted laws establishing the Nigeria Revenue Service (NRS) are a step in the right direction, but they must be backed by clear operational frameworks that compel data sharing and joint enforcement actions. The Joint Revenue Board must be empowered as a powerful arbiter and coordinator, not just a talking shop.
2. Accelerate Digital Unification. Technology is the great enabler. Nigeria must prioritise investment in a centralised, interoperable digital platform—a “National Tax Gateway”—that seamlessly connects the FIRS, Customs, CAC, and state revenue services. This platform would serve as a single window for taxpayer data, making redundancy and contradiction a thing of the past.
3. Foster a Culture of Collaboration. Ultimately, systems are run by people. Breaking down institutional silos requires a concerted effort to foster a shared mission among the staff of these various agencies. Joint training programs, shared performance metrics, and leadership that champions cooperation are essential to shifting the culture from one of competition to one of collective purpose.
The success of Nigeria’s tax policy will not be determined by the rates we set, but by the efficiency and integrity with which we administer them. In a world moving away from fossil fuels, a robust, internally generated revenue base is our only path to sustainable development. It is the funding source for the schools that will educate our children, the hospitals that will care for our families, and the infrastructure that will power our industries.
By finally cracking the collaboration code, we can transform our tax system from a source of frustration into a pillar of national strength. It is a difficult but necessary journey—one that requires us to weave our disparate threads of governance into a stronger, more resilient fiscal fabric for all Nigerians.
Abdullateef Muhammad Awal is a PRNigeria Fellow
