In a move to boost government revenue, the Federal Government has announced plans to raise the Personal Income Tax (PIT) for high-income earners from 18.6% to 25% once the new Tax Reform Bills become law.
The adjustment is expected to complement a 20% revenue increase achieved last year, according to Finance Minister and Coordinating Minister of the Economy, Mr. Wale Edun.
Speaking during a Zoom dialogue session in Abuja, Edun highlighted that the government’s focus on strengthening revenue streams comes as Nigeria’s economy has seen relative stability over the past 18 to 20 months.
“The trajectory of revenue growth is encouraging, and with these reforms, we aim to maintain the momentum,” Edun said.
“The Tax Reform will also ensure tighter control over government expenditure.”
Economic Growth and Sectoral Focus
Looking ahead, Edun projected that economic growth for 2025 would be largely driven by key sectors including agriculture, housing, and infrastructure.
He outlined specific plans to enhance these sectors, starting with agriculture, where the government intends to continue promoting improved farming techniques for both dry and wet seasons to ensure good harvests.
For the housing sector, Edun announced the introduction of a new 25-year low-interest mortgage scheme designed to address the country’s housing deficit. Interest rates will be kept within single or low double digits to make housing more accessible for Nigerians.
On infrastructure, Edun pointed to the Highways Management and Development Initiative (HMDI), which will facilitate the concessioning of major highways for improved road infrastructure.
Notably, the 125-kilometre Benin-Asaba Highway is being fully funded by a private organization.
Shifting Financing Strategies and Pension Reforms
As part of its economic strategy, the government is transitioning away from concessional and bilateral financing towards cheaper funding sources, including domestic bond issuance.
The government also remains committed to resolving the legacy pension debt, with over N700 billion in bonds issued for pension payments.
Edun reiterated that despite Nigeria’s reliance on oil, the administration is keen on creating a safer and more investor-friendly environment for oil operations, with a focus on maximizing revenue from fossil fuels while fostering public-private partnerships and joint ventures.
“We must continue to maximise revenue from oil while it remains viable,” he stated. “Now is the time for equity, revenue generation, and private sector participation, both domestically and internationally.”
Economic Stabilization and Future Prospects
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Reflecting on the economic landscape at the start of President Bola Ahmed Tinubu’s administration, Edun revealed that the country narrowly avoided a financial collapse due to over-reliance on illegally borrowed central bank funds.
However, he expressed optimism about the nation’s economic recovery, pointing to the 3.84% growth rate in the last quarter of 2024, which exceeded the annual target of 3.4%.
“Inflation has started to slow down, and food inflation is also on the decline,” he said, adding that sectoral dynamics had contributed to a reduction in petroleum and energy costs.
Edun also noted that stabilizing the exchange rate has had a positive impact on the costs of imported goods and services, including healthcare and education.
Revenue Growth and Positive Economic Indicator
According to Edun, the balance of trade is now positive, with government revenues increasing by 20% in 2024. As a result, the budget deficit is shrinking, and debt servicing as a percentage of revenue has decreased.
“All economic indicators are moving in the right direction,” Edun remarked. “Most importantly, the cost of living is gradually improving.”
Looking ahead, the government remains focused on further stabilizing the economy and creating an environment conducive to private sector investment.
Additionally, leveraging technology to enhance revenue generation from government-owned enterprises will be a priority.
“The progress we’ve made thus far is encouraging, and we are committed to building on this foundation to ensure long-term economic growth and stability,” Edun concluded.
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