Nigeria’s Tax Reform Bills and FIRS’s Zacch Adedeji: Unpacking the Controversy

President Bola Tinubu’s recent submission of four tax reform bills to Nigeria’s National Assembly has ignited significant debate. At the center of this controversy is Zacch Adedeji, Chairman of the Federal Inland Revenue Service (FIRS), whose efforts to clarify the reforms have only intensified discussions around their implications.

The four bills introduced by Tinubu’s administration each have distinct objectives: the Nigeria Tax Bill aims to harmonize diverse tax laws to reduce redundancy, the Nigeria Tax Administration Bill focuses on standardizing tax processes, the Nigeria Revenue Service Bill seeks to establish a new National Revenue Service (NRS) to streamline revenue collection, and the Joint Revenue Board Bill proposes a framework for addressing revenue disputes between states and local governments.

A key element in these proposals is replacing the FIRS with the NRS, which would take on sole responsibility for collecting all government revenues, including those from sectors like oil, customs, and ports. The NRS would become one of Nigeria’s most powerful agencies, even surpassing entities like the Central Bank of Nigeria (CBN) and the Nigerian National Petroleum Company (NNPC) in terms of influence.

Another contentious issue is the proposed Value Added Tax (VAT) distribution model. Under this framework, VAT revenues would significantly benefit states where businesses are headquartered, sparking concerns that northern states, where consumption is high but business headquarters are fewer, may lose out. Gombe State Governor Muhammad Inuwa Yahaya, representing the Northern Governors Forum, expressed opposition to this model, emphasizing the need for an equitable revenue distribution that does not disadvantage any region.

In response, the National Economic Council (NEC), chaired by Vice President Kashim Shettima, recommended that Tinubu withdraw the tax reform bills to allow for more consultation. Governors and Federal Executive Council (FEC) members, including Finance Minister Wale Edun and Budget and National Planning Minister Abubakar Bagudu, were present at the NEC’s 144th meeting, where they raised concerns about the need for consensus on the reforms.

Oyo State Governor Seyi Makinde underscored the importance of further deliberation, suggesting that additional consultation would serve national interests. However, despite the NEC’s recommendation, President Tinubu has decided not to withdraw the tax reform bills, with his spokesperson, Bayo Onanuga, affirming that the legislative process will proceed, allowing input and potential modifications during public hearings.

The proposed reforms aim to streamline tax administration, boost efficiency, and align Nigeria’s tax system with global standards. These bills are designed to simplify tax compliance and address overlapping responsibilities, ultimately enhancing the ease of doing business in Nigeria.

FIRS Chairman Zacch Adedeji, widely seen as a driving force behind these proposals, has had a notable career in finance and public administration. Born on January 8, 1978, in Ogbomosho, Oyo State, Adedeji graduated with first-class honors in Accountancy from Obafemi Awolowo University and later earned a Master’s and Ph.D. in the same field. His career spans roles at Procter & Gamble, where he served as Corporate Finance Manager for West Africa, to his appointment as Finance Commissioner in Oyo State. Before his current role, Adedeji was Executive Secretary of the National Sugar Development Council (NSDC), appointed by former President Muhammadu Buhari.

In a bid to build support for the reforms, Adedeji has actively engaged with members of the National Assembly, addressing both the Senate Finance Committee and the House Committee led by Hon. James Faleke. He emphasized the reforms’ focus on transparency, efficiency, and aligning with the global digital economy, while assuring that no additional taxes would be introduced, consistent with Tinubu’s pledge not to “tax poverty and inflation.”

Yet, despite these assurances, the discrepancy between the president’s stance and the NEC’s recommendation adds to the confusion surrounding the tax reform bills. The division between the FEC and the NEC is perplexing, particularly given that both entities are under the ruling All Progressives Congress (APC).

As discussions continue, the implications of these reforms for Nigeria’s economy and Adedeji’s ultimate intentions remain in question. The outcomes of these bills will likely have a lasting impact on Nigeria’s fiscal and economic landscape.