Emmanuel OchayiWhen the Nigerian government unveiled the Tax Reform Bills, it was met with cautious optimism. Promising to streamline over 66 tax levies into a manageable eight and boost investment through equitable tax measures, the initiative seemed poised to address long-standing inefficiencies in the country’s fiscal structure.
Yet, beneath the veneer of ambition lies a host of concerns. At the heart of the reform is a contentious plan to incrementally increase the Value-Added Tax (VAT) from 7.5% to 15% by 2030. Critics argue that this measure could exacerbate economic inequality, burdening households already grappling with inflation and stagnant incomes.
Join our WhatsApp ChannelThe government argues that aligning Nigeria’s tax regime with ECOWAS standards is a necessary step toward fostering regional integration. However, the timing has raised eyebrows. Economist, Dr. Samuel Okechukwu warns, “In an environment like ours, where informal markets dominate, raising VAT without proper safeguards could stoke evasion and erode the very revenues the government seeks to increase.”
Broken Promises of Inclusion
While the bills promise to exempt minimum wage earners and essential goods, the optics of raising VAT while reducing corporate tax rates for big businesses have sparked outrage. Small business owners feel sidelined despite provisions for tax exemptions on turnovers below ₦50 million.
Daniel Oluwani, a bakery owner in Lagos, expressed his frustration: “They say it will help small businesses, but I don’t see how. Compliance costs are already high, and this new system only adds more paperwork. Who benefits from this reform? It’s not people like me. I still have to pay workers irrespective of this and current hardship already handed over to us.”
His sentiment echoes among many Nigerians who fear that the reforms prioritise revenue collection over addressing pressing social needs. For instance, the lack of a transparent framework for reinvesting tax revenues into public goods like healthcare, education, and infrastructure has left citizens skeptical.
Deepens Regional Disparities
A particularly controversial aspect of the Tax Reform Bills is the proposal to distribute VAT revenue based on consumption rather than company registration. While this model may seem equitable on paper, it risks further marginalising Nigeria’s less-developed regions.
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“This policy could widen the gap between states like Lagos, with its bustling economy, and others in the north that rely on federal allocations,” said Audu Ibrahim, a public policy analyst. “Without strong redistribution mechanisms, the bill will deepen the inequality it claims to address.”
Voices of the People
Many Nigerians feel disconnected from the government’s vision for the reforms. A civil servant, Aliyu Muhammed, shared his concerns: “The government says these changes will benefit us, but where is the accountability? Every new tax is like another nail in the coffin for the average Nigerian.”
In contrast, financial expert, Ifeoma Ezeokoli, argues that the reform has its merits but needs time for better consultation and better execution. “Streamlining taxes is a step in the right direction,” she said. “But implementation is everything. Without transparency and modernised infrastructure, this could become a bureaucratic nightmare.”
Meanwhile, Olabisi Adeniran, a teacher in Ibadan, highlighted the psychological toll on citizens. “Every day, you hear about new policies, but they all feel disconnected from our struggles. These reforms might work for economists, but not for everyday Nigerians like me.”
Expert Warnings
Dr. Funke Adeyanju, a taxation specialist, stressed the need for phased implementation and robust monitoring mechanisms. “A sudden hike in VAT can trigger inflation and reduce consumer spending power,” she said. “To avoid economic shocks, the government must engage stakeholders extensively.”
Political analyst, Ahmed Yusuf, echoed these sentiments, emphasising the risks of overburdening taxpayers. “We need a balanced approach. Taxing the rich sounds good in theory, but without safeguards, it could drive capital offshore and hurt investment. Equity is key.”
A Path Forward or a Roadblock?
The Tax Reform Bills have reignited debates about governance and inclusivity in Nigeria. For many, the fear is that these measures will serve as yet another example of well-intentioned policy marred by poor implementation.
However, the government has an opportunity to recalibrate. Transparency, inclusivity, and phased rollouts could transform these reforms into a cornerstone for Nigeria’s economic revitalisation. As economist Dr. Okechukwu noted, “It’s not just about collecting more revenue; it’s about showing Nigerians how that revenue will be used to improve their lives.”
The stakes are high, and for millions of Nigerians, the difference between progress and hardship hinges on how the government chooses to act next. Will the Tax Reform Bills bridge the gap between promise and reality, or will they deepen the divide between the government and its people? Only time will tell.
Emmanuel Ochayi is a journalist. He is a graduate of the University of Lagos, School of first choice and the nations pride. Emmanuel is keen on exploring writing angles in different areas, including Business, climate change, politics, Education, and others.
