How Revenue Administration and Taxation REFORMS Improved Tax Collection Significantly.

0. Problem: An over-reliance on oil, corruption in revenue and tax administration and government’s frequent inability to meet its own terms of the ‘social contract’ meant that there was general unwillingness to pay tax among Nigerians.
   
   Reform Actions:

- Establishment of Study Group (2002) and Working Group (2003) on the Nigerian Tax System 

- Operational Restructuring of the Federal Inland Revenue Service (FIRS) 

- Nigerian National Tax Policy 

- FIRS Autonomy through the passage of the FIRS Act of 2007 

- Establishment of Tax Appeal Tribunal 

- Establishment of Tax Appeals Tribunal 

- Modernisation of FIRS 

- Stronger Compliance and Enforcement 

- Taxpayer Services, including taxpayer education 

- Entrenching a Strong Ethical Code 

- Automation of Key Processes 

- Capacity Building 

- Domestic and International Cooperation and Collaboration 

- Strategic Performance Management regime

- Innovative and Proactive Joint Tax Board.

Main Achievements: The reforms constitute one of the deepest, most comprehensive and most successful reform efforts anywhere in the developing world. Tax collection improved significantly from ₦455 billion in 2000 to ₦4.8 trillion by 2013. Following the reforms, actual collection of ₦3 trillion in 2008 alone was higher than the collection for the previous eight-year period put together. The automation of key processes reduced corruption and abuses, thereby leading to high level of efficiency. Other parastatals should learn from the Federal Inland Revenue Service reforms to improve their performance.

Key Challenges: (a) many organisations are still not in the tax net, as majority of small businesses pay no tax, with more than 75% of small-scale business operators having the penchant for tax evasion; (b) the tax identification number is yet to be fully operationalised across the country; and (c) until recent reforms to introduce an industry-wide waiver regime, there was a lack of transparency in the operation of the waiver system, which led to loss of government revenue. 

Reference:  Public Service Reforms in Nigeria (1999-2014) - A Comprehensive Review

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