The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, has criticized Nigeria’s current tax structure, saying it places an unfair burden on the poor and businesses while failing to promote economic growth.
Speaking at the 2025 Annual General Meeting (AGM) of the Finance Correspondents Association of Nigeria (FICAN) in Abuja, Oyedele noted that the country’s tax policies must shift focus from taxing poverty and capital to supporting business expansion and wealth creation.
“The multiplicity of taxes and taxing agencies places an excessive burden on businesses, leading to frustration and closures across the country,” he said.
He explained that an effective tax system should first allow businesses to expand before imposing taxes on their profits, following the model used in more developed economies.
Oyedele outlined several changes aimed at simplifying the tax system and making it fairer. One key proposal is a progressive Personal Income Tax (PIT) structure, which includes the following:
- Earnings up to ₦800,000 will be exempted from tax
- 15% tax on the next ₦2.2 million
- 18% tax on the next ₦9 million
- 21% tax on the next ₦13 million
- 23% tax on the next ₦25 million
- 25% tax on incomes above ₦50 million
For businesses, Corporate Tax rates are expected to be reduced gradually:
- From 30% to 27.5% in 2025
- Further reduction to 25% in 2026
- Exemption for businesses with annual revenue below ₦50 million
Oyedele reassured state governors that these reforms would ultimately increase government revenue. He noted that about 85% of key tax revenues, including Personal Income Tax, Property Tax, Land Tax, and Value Added Tax (VAT), are primarily collected by states.
However, he pointed out that many state governments have not fully implemented Property Tax, even though it has the potential to generate significant income.
“Personal Income Tax in Nigeria contributes only about 10% of total tax revenue, whereas globally, the average is around 30%,” he observed.
Oyedele defended the plan to reduce taxes on low-income earners while increasing the burden on the wealthy. He cited South Africa as an example, where 1% of the population contributes over 90% of total Personal Income Tax revenue.
He listed some expected benefits of the tax reforms:
For Businesses:
- Lower tax burden
- Payment in Naira instead of foreign currency
- Refund of input VAT credit
For Households:
- More disposable income for low-income earners
- Tax waivers on essential food items
- Suspension of tax on fuel
For Government:
- Economic stability
- Higher revenue collection
- More foreign and local investment
- Improved international credit ratings
