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Taiwo Oyedele, the chairman of the Presidential Fiscal Policy and Tax Reform Committee, has stated that Nigeria’s current tax system does not support low-income citizens and, as a result, stifles economic growth and development.
Oyedele explained that the system disproportionately taxes the poor, capital and investments rather than focusing on profits and wealthier individuals.
He asserted that it is time for governments at all levels to shift their focus away from taxing the impoverished majority and instead concentrate on collecting taxes from the wealthiest 10 percent of the population.
Oyedele spoke in Abuja at the weekend during the 2025 Finance Correspondents Association of Nigeria (FICAN) Annual Forum in Abuja.
“Virtually every state in Nigeria is chasing the bottom 90 percent to collect taxes. They are allowing the top 10 percent to have a field day,” he said.
His comments come days ahead of the public hearing on the tax reform
bills by the National Àssembly which begins in Abuja on Monday- February 24, 2025.
Oyedele called for active citizen participation in the upcoming hearing, emphasizing its importance for advancing people-centric tax reforms.
He emphasised that the root of poor tax administration in Nigeria stems from the government’s inability to collect taxes from high-income earners, an issue that the ongoing tax reforms aim to resolve.
Read also: Senate to begin public hearing on tax reforms bills Monday
He underscored the urgent need to phase out outdated and unclear tax provisions, while tackling multiple taxation and the proliferation of taxing agencies.
“Nigeria’s tax system is unconducive to growth due to the multiplicity of taxes and taxing agencies, as well as the high corporate tax burden on businesses.”
“We require budgetary reforms along with enhanced accountability and transparency,” he stressed.
Oyedele emphasized the need to optimize all revenue sources, highlighting that personal income tax (PIT) contributes less than 10% of Nigeria’s total tax revenue, significantly below the global average of 30%.
He said for instance, personal income tax (PIT) generated in 2023, amounted to N1.5 trillion nationwide, as against N10 trillion from the removal of fuel subsidies and foreign exchange (FX) gains.
Read also: International trade: Export experts examine how tax reforms can help Nigeria’s export drive
The proposed tax reforms, as outlined by Oyedele, consequently aim to stimulate economic growth, enhance competitiveness, and ensure shared prosperity.
These reforms will reduce business risks by eliminating minimum tax requirements, allowing for interest deductions, streamlining tax rulings, and addressing the statute of limitations.
They will also lower tax burdens, reduce tax rates, introduce a more competitive tax regime, input VAT credits, tax reliefs, facilitate tax payments in naira, and ensure tax refunds.
In support of small businesses, Oyedele said that the proposed tax reform bills propose to raise the tax exemption threshold for businesses from N25 million to N50 million in annual turnover.
This initiative is designed to alleviate the tax burden on small enterprises, enabling them to grow and contribute more sustainably to the economy.
On the contentious VAT aspect of the bills, Oyedele explained that the reforms seek to drive equity and fairness. 97 percent of VAT revenue is generated by the top three percent of taxpayers, including major corporations like MTN, Dangote, Access Bank, and Transcorp Hotel.
Conversely, small businesses rarely pay VAT and often fail to remit it even when they collect such.
He said, “These top companies are paying VAT today, and they have the capacity to comply with our proposals.
“The issue is that most of their VAT contributions are credited to Lagos State because their headquarters are located there, while oil companies contribute VAT to Rivers State.
“We propose that VAT collected by these large corporations should be credited to the states where their customers consume their goods and services, not just where their headquarters are based.”
He noted that this reallocation of VAT will benefit states, providing them with added incentives to promote business formalization.
According to Oyedele, the proposed tax reforms will provide significant economic relief for households through measures such as wage awards, transport subsidies, tax waivers on food imports, tax suspensions on fuel products, and reduced tax burdens.
The reforms aim to exempt low-income earners, lower tax rates for the middle class, and introduce VAT zero-rating and exemptions for essential items.
For businesses, the proposed tax reforms will mitigate risks, lower tax rates, and offer tax refunds.
They will also enhance companies’ ability to deduct interest expenses, benefit from input VAT credits, and receive tax relief along with economic development incentives.
The reforms aim to reduce VAT rates for the general populace and introduce zero rates on essential goods and services.
For the government, the proposed reforms will strengthen macroeconomic stability, enhance revenue mobilization, and improve the tax-to-GDP ratio, enhance credit ratings, and lower debt costs.
“By increasing its credit rating and reducing the cost of debt, the government aims to achieve a healthier fiscal balance, thereby ensuring sustainable economic growth for the nation,” the tax expert explained.
The reforms, he reiterated, will address distortions in the incentives regime, improve free trade zones, and promote equity and fairness between the government and taxpayers.
He further emphasised on optimizing revenue collection at all levels of government, noting that this is essential for Nigeria’s economic development.
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