The Chairman of the Federal Inland Revenue Service (FIRS), Dr. Zacch Adedeji, has disclosed that about 90 percent of tax revenue generated in Nigeria is allocated to state governments, underscoring the crucial role of taxation in supporting subnational development.
Adedeji made this revelation during a stakeholders’ engagement session in Abuja on Tuesday, where he highlighted the importance of fiscal cooperation between the federal and state governments to enhance the country’s tax administration system.
He explained that contrary to public perception, the bulk of tax revenue collected by the FIRS is shared among the 36 states and the Federal Capital Territory (FCT) through the Federation Account Allocation Committee (FAAC).
When we talk about tax collection, many assume it is solely for the federal government. However, the truth is that about 90 percent of what we collect is distributed to the states and local governments. This means that every naira collected in taxes directly contributes to grassroots development,” Adedeji stated.
The FIRS boss stressed that efficient tax collection remains central to sustainable growth and reducing overreliance on oil revenue. He also reaffirmed the agency’s commitment to simplifying tax processes, closing leakages, and ensuring transparency in revenue distribution.
According to him, the ongoing fiscal reforms aim to create a single, efficient tax system that promotes ease of doing business while strengthening the revenue base of all tiers of government.
We are building a tax system that works for everyone — one that is fair, transparent, and encourages voluntary compliance. The more we improve our systems, the more resources become available for education, healthcare, and infrastructure at the state level,” he added.
Adedeji also urged state governments to complement federal efforts by developing their internal revenue systems and ensuring judicious use of allocations derived from tax collections.
He noted that the FIRS would continue to collaborate with the Joint Tax Board (JTB) and other relevant agencies to harmonize data and streamline tax administration across the federation.
The engagement session attracted stakeholders from the public and private sectors, including state finance commissioners, tax administrators, and representatives of the organized private sector, who commended FIRS for its transparency and reforms in revenue mobilization.
Adedeji’s remarks come at a time when both federal and state governments are seeking to strengthen fiscal sustainability amid fluctuating oil prices and economic challenges.
