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Why 2016 tax collection slumps to N1.2trillion

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Facts have emerged as to the 2016 tax collection by the federal government failed below expectation, hitting a record 12 year low of N1.2tn.

According to experts, apart from possibility of unreported sums which may rise the total to about N5Trillion which was the 2016 target, analysts say the disruptions caused by forex crisis, Treasury Single Account (TSA) shocks and collection interactions’ by government officials and tax consultants cannot be unconnected with the slump.

At a collection figure of N1.2 trillion as at December 31, 2016, the collection fell grossly below both the government target and the Federal Inland Revenue’s  (FIRS) self-imposed target of N5 trillion.

Because of the fear of a possible repeat, the framework of 2017 national budget seemed to have moved away from relying on revenue from taxes to income from resources,’ a structure that had been driving the Nigerian economy since inception.

Analysts say the federal government relied so much on taxation without due diligence and understanding that not enough homework had been done on the psyche of Nigerians on the need to pay taxes as and when due.

Though there indications that not all expected tax income had hit the portal or account of the FIRS as there remittances expected form key agencies like Nigerian Customs Service, and several other agencies of the government, the total at the end may not hit close to 50 per cent to the target N5tn.

In an interview, an Abuja based Development Economist, Mr. Odilim Enwegbara, said the collapse of the tax target stems on the fact that the Minister of Finance was yet to understand the kind of tax policy Nigeria requires to get the country off oil reliance and diversify the economy.

He said apart from mere tax awareness, government has not done much in blocking all the tax collection drainpipes in the economy.

It would be recalled that the annual summary of tax collection from year 2000 to last year indicates that the highest collection was recorded in the tenure of Mrs. Ifueko Omoigui Okauru, with the sum of N5.007tr in year 2012 following hi-tech and revolutionary tax administration reforms introduced then.

That feat was a record when compared to a paltry N455.3bn contribution of taxes in year 2000 and after her tenure, the feat is yet to be equaled as collection has been pointing south from N4.805tr in 2013, to N4.714 in 2014 and N3.741 last year; and a likely slump below N2tr this year, if figures reported by the Minister of Budget are anything to go by.


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