THE Federal Inland Revenue Service (FIRS) has clarified the Federal Government’s borrowing strategy, insisting that debt is a legitimate tool for economic growth and infrastructure financing, not an indicator of financial crisis.
News Point Nigeria reports that at a briefing with State House Correspondents on Tuesday, FIRS Chairman, Zaccheus Adedeji, also announced that Personal Income Tax (PIT) and Company Income Tax (CIT) reforms will take effect from January 2026, aimed at widening Nigeria’s revenue base and reducing overdependence on borrowing.
Adedeji explained that the Tinubu administration has already ended the controversial Ways and Means financing through the Central Bank of Nigeria (CBN), converting the facility into a structured federal loan that is now being serviced with principal and interest.
“Borrowing is not a problem; it is part of every viable nation’s ecosystem. No country survives entirely on its own revenue,” Adedeji said.
“When the government borrows from banks, it pays interest; banks then pay salaries from that, and taxes are collected from their profits. It is a cycle that sustains continuity.”
He argued that borrowing is a standard component of national budgets, stressing that it is often used to finance critical infrastructure projects such as roads, which in turn generate future tax revenues.
“A budget has three pillars: expenditure, revenue, and loans. If my expenditure is N100,000, revenue is N90,000, and borrowing is N10,000 in line with what is approved by the National Assembly, what is wrong with that?” he asked.
The FIRS chief confirmed that tax reforms targeting PIT and CIT will be rolled out from January 2026 as part of efforts to expand Nigeria’s tax net. The reforms, he noted, align with the government’s fiscal strategy to strengthen revenue collection and ease pressure on borrowing.
“These reforms are meant to build a more sustainable fiscal framework for Nigeria and reduce our reliance on debt,” Adedeji said.
Meanwhile, the Manufacturers Association of Nigeria (MAN) has expressed deep concerns over the government’s plan to introduce a Tax Stamp system for excisable goods, warning that the measure could worsen the challenges faced by industries.
The association’s Director-General, Segun Ajayi-Kadir, said the system, often promoted as a tool to curb smuggling and counterfeiting, is in reality a “hidden tax” that imposes high compliance costs, stifles innovation, and reduces competitiveness.
“While the intention is understandable, evidence worldwide shows that tax stamps often create operational bottlenecks, increase costs for manufacturers, and deliver limited revenue benefits,” he said.
Ajayi-Kadir argued that the measure contradicts the Tax Act 2025, which was designed to give relief to small and medium industries by reducing multiple levies. Instead, he said, tax stamps would roll back those gains, burdening producers with extra costs.
Ajayi-Kadir further warned that consumers may turn to cheaper, illicit alternatives if legitimate products become unaffordable, thereby eroding government revenue and threatening public safety.
He cited experiences from Kenya, Tanzania, and Uganda, where similar systems triggered legal disputes, compliance challenges, illicit trade growth, and public resistance.
Even the United Kingdom, he noted, has reformed its tax stamp regime after finding it outdated, costly, and ineffective.
“Ultimately, the main beneficiaries of tax stamps are the vendors, not governments or industries. Nigeria already has robust home-grown digital tracking systems like EDS and e-invoicing, which can provide transparency without duplication or hidden costs,” he said.
Reiterating manufacturers’ commitment to paying excise duties, MAN called on the government to drop the tax stamp proposal, warning that implementing it now would “jeopardise industrial sustainability” at a time when companies are already battling high energy costs, inflation, and rising excise rates.
“The Nigerian market risks an upsurge in illicit trade if this policy is introduced. It is a dangerous path that could harm legitimate businesses and worsen the plight of consumers,” Ajayi-Kadir cautioned.