Nigeria’s government has embarked on an ambitious tax reform, aiming to reshape the country’s financial landscape. President Bola Tinubu’s administration has introduced a new tax regime with progressive rates, exemptions for the poorest, and incentives for small businesses. The goal is to increase Nigeria’s tax-to-GDP ratio, which has long been a national embarrassment, fluctuating between 9% and 13%.
The theory behind the reform is sound – Nigeria’s reliance on borrowing and oil revenue is unsustainable. The new laws are meant to be the foundation for a post-aid Nigeria, where citizens pay for their own schools, hospitals, and infrastructure. However, the implementation faces significant challenges, rooted in the country’s deep-seated distrust of the government.
The informal sector, which includes street vendors, drivers, and market women, already pays a form of taxation, though arbitrary and backed by the threat of violence. The government’s efforts to bring these workers into the formal tax system are met with skepticism, as they see it as a mere “extraction machine” rather than a genuine attempt to improve public services.
Moreover, the government’s decision to partner with France on data mining has fueled concerns of “digital colonialism,” further eroding public trust. Contradictory signals, such as the potential reintroduction of physical tax stamps, have also sown confusion and unease among businesses.
The success of this tax reform will be measured not in revenue reports, but in the trust of the people. If the government can translate increased tax collection into tangible improvements in public services, it could become a blueprint for African self-reliance. However, if the reform fails, it will confirm the public’s belief that the problem lies not in the amount of money, but in the integrity of those handling it.
The Tinubu administration has taken a bold step, but the path ahead is fraught with deep-rooted distrust and high expectations. Nigeria’s tax gamble is a gritty, complicated, and deeply fraught front-page story, where the state has asked the people to pay up, and the question remains: what will it deliver in return?
