From Tax Collector to Tax Educator: Zacch Adedeji’s Role in Nigeria’s Reform Revolution
By Abass Abdullahi
Dr. Zacch Adedeji, the Chairman of the Federal Inland Revenue Service (FIRS), is widely recognized for his leadership in tax administration and his significant role in Nigeria’s revenue collection. Known for his expertise in accounting and public administration, Adedeji has often been compared to the Biblical Zacchaeus, the tax collector. However, the recent public discussions surrounding the new Tax Reform Bills have revealed a different side of him—one that showcases his abilities as a teacher and communicator.
At a recent public hearing on the tax reform bills in the House of Representatives, Adedeji’s role as an educator took center stage. With clarity and simplicity, he explained complex aspects of the reform bills, ensuring that even the most basic concepts were accessible to all. His straightforward approach made it clear that these reforms were essential for the country’s tax system.
Adedeji pointed out that the current tax laws disproportionately benefit just three states—Lagos, the Federal Capital Territory (FCT), and Rivers—leaving the rest of the country with little to no benefit. He highlighted that over 70% of the Value Added Tax (VAT) is allocated to these three regions, mainly because they are home to most corporate headquarters.
“The current VAT distribution system benefits Lagos, Rivers, and the FCT, which host the corporate offices of major companies,” Adedeji explained. “But the reality is, a significant portion of consumption happens outside these areas. This needs to change.”
The proposed tax reforms aim to correct this imbalance by introducing a more equitable allocation model based on consumption rather than corporate headquarters. The new system, he explained, will ensure that all states—regardless of their economic status—receive their fair share of VAT revenue.
Using data from October, Adedeji illustrated the unequal distribution of VAT funds: “Lagos receives 42%, Rivers gets 16%, and Oyo and the FCT together take over 70%. These states house the corporate headquarters, but they do not represent where most of the consumption occurs.”
He continued by stressing that with the new bill, all states will benefit from VAT collections, ensuring a more balanced financial ecosystem across the country. This model, he emphasized, would no longer favor just the wealthiest regions but will extend benefits to all Nigerians, regardless of their state’s economic situation.
Adedeji also clarified misconceptions about the proposed “derivation principle.” He explained that, unlike the oil industry, where the derivation principle is based on production, VAT should be allocated based on where goods and services are consumed. “VAT is a consumption tax. It’s about where the money is spent, not where the companies are headquartered,” he said, explaining that the current structure of VAT collection doesn’t reflect the realities of Nigeria’s economy.
The public hearing was just the beginning. Less than a week later, Adedeji’s explanation had swayed opinions in favor of the reform. One prominent supporter was Hon. Abdulmumin Jibrin, a member of the House of Representatives from Kano State. On national television, Jibrin expressed confidence that the tax reforms would soon be passed by both chambers of the National Assembly.
Jibrin acknowledged that there were concerns, particularly from the Northern regions, about the potential impact of the reforms. However, he emphasized that the benefits of the reforms far outweighed any perceived drawbacks. “Many who oppose the reforms have not fully understood them,” Jibrin said. “The ultimate goal of these reforms is to improve revenue generation and ensure better distribution, which is critical for the country’s long-term economic survival.”
Jibrin also praised the economic vision of President Bola Tinubu, pointing to other significant reforms such as the removal of fuel subsidies and the floating of the Naira. These changes, he believes, will lay the groundwork for a stronger, more sustainable economy, despite the short-term challenges.
Meanwhile, as Adedeji continues his advocacy for the new tax reforms, he is also overseeing impressive achievements in revenue generation. By the end of September 2024, the government had already collected N18.5 trillion out of a projected N19.4 trillion for the fiscal year. In particular, the Education Tax exceeded expectations, with N1.5 trillion collected, far surpassing the N70 billion target.
Adedeji shared these figures during a joint committee meeting with the National Assembly’s Finance, Budget, and National Planning Committees. He expressed confidence that the government would exceed its revenue targets by the end of the year, demonstrating the effectiveness of the ongoing reforms.
“The collection of N1.5 trillion in Education Tax, against a target of N70 billion, is a testament to the success of our strategies,” Adedeji said. “By the end of the year, we will have far surpassed the N19.4 trillion target for 2024.”
Abass Abdullahi is a public affairs analyst based in Kaduna.
