FIRS: Tax Revenue As Nigeria’s New ‘Crude Oil’

By Tgnews

In a remarkable shift that echoes Nigeria’s pre-independence economic past, tax revenue has overtaken crude oil as the nation’s fiscal lifeline, with the Federal Inland Revenue Service (FIRS) emerging as the backbone of the Federation Account Allocation Committee (FAAC) disbursements.

Once reliant on the towering groundnut pyramids of the North, cocoa exports of the West, and palm oil from the East, Nigeria’s economy pivoted to crude oil after its discovery in Oloibiri in 1956. For decades, the Nigerian National Petroleum Corporation (NNPC) reigned supreme as the primary revenue generator for the federal, state, and local governments.

The FIRS, under the leadership of Zacch Adedeji, has turned tax collection into Nigeria’s new ‘crude oil’—a transformation that warrants applause for President Bola Ahmed Tinubu’s administration

Today, however, that narrative has flipped, and the FIRS, under the leadership of Zacch Adedeji, has turned tax collection into Nigeria’s new ‘crude oil’—a transformation that warrants applause for President Bola Ahmed Tinubu’s administration.

In 2024, FIRS redefined Nigeria’s revenue landscape, contributing nearly 70% of the total funds shared among the three tiers of government at FAAC meetings. The numbers tell a compelling story: out of the N2.068 trillion accrued to the Federation Account in January, FIRS delivered N1.275 trillion—over 50% of the total—while NNPC, the Nigerian Upstream Petroleum Regulatory Commission (NUPRC), and the Nigeria Customs Service (NCS) collectively accounted for the rest.

February saw FIRS raise the bar further, contributing N1.491 trillion of the N2.3 trillion pool, dwarfing NNPC’s N92 billion haul. By June, the agency’s contribution peaked at N2.841 trillion out of N3.5 trillion, with NNPC’s input plummeting to a mere N8.3 billion.

This upward trajectory held steady into the second half of 2024. In July, FIRS accounted for N2.295 trillion of the N3.508 trillion total, representing 65.4% of the haul. Even as figures fluctuated—N1.87 trillion in August, N1.45 trillion in September, and N1.41 trillion in December—the agency consistently outpaced its counterparts, cementing tax revenue as the Federation’s fiscal cornerstone.

The agency consistently outpaced its counterparts, cementing tax revenue as the Federation’s fiscal cornerstone

Dr. Oluwatoyin Madein, Accountant General of the Federation, captured this seismic shift succinctly: “Tax revenue, as of today, is the highest source of revenue accruing to the Federation. At FAAC meetings, we eagerly await the numbers from FIRS because their performance keeps increasing, bringing succour to all tiers of government.”

This unprecedented success is no fluke. Under Zacch Adedeji’s leadership, FIRS has undergone a radical transformation, reorienting its operations to prioritize taxpayers as partners rather than targets. “We are here to serve the taxpayers,” Adedeji has emphasized. “They are the trees in our vineyard. We must ensure they are well-watered and pruned to bear good fruits.”

We are here to serve the taxpayers

This customer-centric approach saw FIRS restructure its operations around taxpayers’ needs, categorizing them by turnover into large, medium, and emerging tax groups. The result? A streamlined, one-stop-shop system that simplifies tax payments, audits, and compliance.

The impact is tangible: in 2024 alone, 182,724 new taxpayers—a 25.3% increase—voluntarily joined the tax net via the agency’s Tax Pro-Max platform, marking the largest single-year expansion in recent history. Gabriel Idahosa, President of the Lagos Chamber of Commerce and Industry (LCCI), hailed FIRS for reforms that “enhance business operations,” particularly through technology-driven tax administration and a shift in staff mindset from enforcement to service.

While Adedeji’s reforms deserve credit, the broader economic context set by President Tinubu has been pivotal. Two bold policies—fuel subsidy removal and exchange rate unification—unleashed the non-oil sector’s potential, which now accounts for 75% of FIRS’s revenue haul. “All accolades for this impressive tax collection should go to President Tinubu,” Adedeji has said, noting that these decisions rescued an economy teetering on the brink before May 2023.

The ripple effects are undeniable. States now receive nearly triple their pre-Tinubu FAAC allocations, enabling better planning and fiscal discipline across all tiers. With FIRS targeting N25.2 trillion in 2025, pending tax reform bills before the National Assembly could further bolster this momentum, modernizing a system primed for domestic revenue mobilization.

This is a legacy worth celebrating: a courageous leadership that has turned tax revenue into Nigeria’s new black gold

As Nigeria pivots from oil dependency, FIRS’s stellar performance offers a blueprint for sustainable growth. Adedeji’s ambition to raise the tax-to-GDP ratio to 18% within three years—without burdening taxpayers—signals a future where data and merit, not oil rigs, drive prosperity.

For President Tinubu, this is a legacy worth celebrating: a courageous leadership that has turned tax revenue into Nigeria’s new black gold, ensuring smiles at FAAC meetings and stability for a nation in transition.