Three key revenue-generating agencies in Nigeria—Nigeria Customs Service (NCS), Federal Inland Revenue Service (FIRS), and Nigerian Upstream Petroleum Regulatory Commission (NUPRC)—deducted a total of N533.11 billion as costs for revenue collection in the first seven months of 2024, representing a 99.85% increase from the N266.75 billion recorded during the same period in 2023. This deduction comes from their revenue collection activities, according to data from the Federation Accounts Allocation Committee (FAAC) and reports from the National Bureau of Statistics (NBS).

FIRS accounted for the largest share, deducting N254.82 billion, which reflects a 61.55% increase from the N157.73 billion deducted in 2023. This amount represents 47.8% of the total deductions and covers taxes such as VAT and corporate income tax. NCS followed closely, deducting N147.64 billion, marking a 114.49% rise from N68.86 billion in 2023, largely driven by customs duties. Meanwhile, NUPRC deducted N130.64 billion, a 225.33% jump from N40.16 billion in 2023, due to its oversight of the upstream oil and gas sector.

The cost of collection, which is deducted before revenue is shared among the three tiers of government, saw substantial increases in monthly deductions across the three agencies. The highest collection occurred in July 2024, with N92.11 billion deducted, a 25.85% rise compared to July 2023.

These increases have sparked concerns among state finance commissioners, with calls for a review. Experts, including economist Sheriffdeen Tella, suggest that an audit is necessary to determine the accuracy of these costs. The Presidential Fiscal and Tax Reforms Committee, led by Taiwo Oyedele, has recommended reducing the cost of collection to 1%, aligning with international standards, where countries like South Africa spend less than 1% on revenue collection.

These rising deductions raise questions about the balance between revenue generation and operational costs, with some economists emphasizing that the agencies’ high running costs and reliance on this revenue for operations might justify the current figures.