Nigeria is a country where, for every naira the government earns, more than forty-five kobo disappears into debt servicing before a single public service is delivered. The reform that addresses this is not the enemy of ordinary Nigerians. The system that created this situation, and the beneficiaries of that system who are loudest in opposing its reform, are far more deserving of public scrutiny.
The Civic Talks Moment that Explains Everything
At a recent Civic Talks forum, a man stood up and declared with visible emotions that the new tax laws were going to make it impossible for him to pay his children’s school fees. It was a sincere moment, and it resonated deeply because Nigeria is a country under genuine economic pressure. Any policy that appears to threaten the family budget deserves to be questioned. But a tax expert in the room offered an immediate, patient clarification: school fees — at nursery, primary, and secondary levels are zero-rated under the Nigeria Tax Act. Zero-rated means the government has specifically listed them as outside the VAT net. Schools have no legal basis to increase fees, citing this reform. If anything, the law removes the ambiguity that schools once used to justify unexplained fee increases.
Then a driver in the audience, having listened to the expert walk through the provisions, said he was surprised to discover that at his income level, he would pay little to nothing in personal income tax, but he would be required to file a return. That is the reform distilled: for most Nigerians, the new obligation is not to pay more. It is simply to be counted. To be registered in a functioning fiscal system. To be seen. Not to bleed.
These two exchanges, in my view, contain the entire debate. On one side: real anxiety, amplified by misinformation. On the other: a framework that, once explained clearly, asks less of ordinary Nigerians than the system it replaces. The problem is that the explanation has been consistently drowned out by noise, and the people generating the most noise are not entirely, it turns out, ordinary Nigerians.
The Numbers Every Nigerian Needs To Understand
To assess any tax reform fairly, you need to understand the fiscal reality it is responding to. Here is Nigeria’s fiscal reality, plainly stated. According to the OECD’s Revenue Statistics in Africa 2025, Nigeria’s tax-to-GDP ratio in 2023 was 8.2 per cent — against an African continental average of 16.1 per cent. We collect, as a proportion of our economy, roughly half of what our neighbours collect. The IMF’s mission chief for Nigeria, Axel Schimmelpfennig, put it plainly at a press briefing: “In 2023, Nigeria collected 9.4 per cent of GDP in revenues. That’s one of the lowest ratios that you see in the world and also on the continent.” What that means practically, he added, is that “the government has too few resources for social and development spending on health, on education, on infrastructure.”
That revenue shortfall has a direct and visible consequence on the national budget. In Nigeria’s 2025 Appropriation Act, debt servicing was allocated ₦15.81 trillion — 45 per cent of the total projected revenue. Education received ₦3.5 trillion. Health received ₦2.48 trillion. Security received ₦4.9 trillion. Infrastructure received ₦4.06 trillion. The debt servicing allocation exceeded the combined budget for all four of those sectors together. Put another way: for every ten naira that Nigeria earns, more than four-and-a-half go straight to creditors, before a teacher is paid, before an hospital is restocked, before a road is patched.
BudgIT, the widely-respected fiscal transparency organisation, notes that debt servicing has grown from ₦942 billion in 2014 to ₦12.6 trillion in 2024 and is projected to remain above ₦15 trillion in 2026. This is not a governance failure that appeared overnight. It is the accumulated consequence of a country that has, for decades, spent more than it collected, borrowed to fill the gap, and serviced those borrowings with future borrowings. The reform debate is happening within that context.
This matters because the most common objection to the tax reform — “we don’t trust government with our money” — while understandable, inverts the causal chain. The broken infrastructure that Nigerians rightly resent is, in significant part, a consequence of a government that simply does not have the revenue to maintain it. The debt trap is not separate from the governance problem. It is a function of it. And the reform is one of the few available mechanisms for addressing it.
The reform encountered fierce public opposition — much of it driven by false claims that were subsequently fact-checked. Governor Babagana Zulum of Borno State told the public that “only Lagos will benefit” and that agencies like TETFund, NASENI, and NITDA would be abolished. Each of these claims was false. TETFund was not scrapped; its funding mechanism was restructured into the new Development Levy. NASENI’s levy was consolidated, not eliminated.
What the 2024 Tax Reform Acts Actually Do
The 2024 Tax Reform Acts, signed into law on 26 June 2025 and effective from January 2026, consist of four bills: the Nigeria Tax Act, the Nigeria Tax Administration Act, the Nigeria Revenue Service (Establishment) Act, and the Joint Revenue Board (Establishment) Act. Together, they represent the most significant restructuring of Nigeria’s fiscal architecture since independence. Here is what they actually do for ordinary Nigerians:
- Workers earning ₦800,000 or less annually pay zero in personal income tax. Ninety-eight per cent of Nigerian workers pay the same amount or less than before.
- Ninety-seven per cent of small businesses — those with an annual turnover below ₦100 million — are exempted from Corporate Income Tax. The threshold was previously ₦25 million.
- VAT remains at 7.5 per cent. It was not raised. The list of zero-rated goods and services has been expanded to include basic food items, school fees, medicines, educational materials, medical equipment, and public transportation.
- The severance exemption for workers who lose their jobs has been raised from ₦10 million to ₦50 million, providing greater protection to workers in retrenchment.
- Over sixty overlapping tax heads and multiple agency levies have been consolidated into fewer than ten streamlined statutes, dramatically reducing the number of government agents with a legitimate claim on a business’s revenue.
- At the upper end of the income scale, a Minimum Effective Tax Rate of 15 per cent applies to multinational groups with a global turnover of 750 million or above. High-income earners face progressive personal income tax rates that are meaningfully higher than what the previous system practically enforced.
The reform was designed to be progressive. It asks less of those with less, and more of those who have benefited most from operating in Nigeria, while contributing least to its maintenance.
The Misinformation Campaign, and Who Was Running It
The reform encountered fierce public opposition — much of it driven by false claims that were subsequently fact-checked. Governor Babagana Zulum of Borno State told the public that “only Lagos will benefit” and that agencies like TETFund, NASENI, and NITDA would be abolished. Each of these claims was false. TETFund was not scrapped; its funding mechanism was restructured into the new Development Levy. NASENI’s levy was consolidated, not eliminated. The VAT redistribution formula was amended by the National Assembly specifically to address the concerns of northern states about derivation versus population weighting. Former Governor Aminu Tambuwal cited public hardship as grounds for opposing a reform that, as we have established, exempts 98 per cent of workers from any additional burden.
It is worth pausing to ask: Why would elected leaders spread demonstrably false information about a reform’s content? The most charitable interpretation is ignorance. The less charitable and more likely interpretation is that the reform’s actual provisions were not the problem. The problem was what the reform represents structurally: a fiscal system with fewer discretionary loopholes, greater transparency in revenue distribution, and a widened compliance net that would eventually reach constituencies beyond the market woman and the PAYE employee.
It is not ordinary Nigerians who fear a functioning tax system. It is those who have spent years operating outside one.
A Case Study of What the Old System Protected
If you want to understand concretely who benefits from Nigeria’s broken tax architecture, consider the case of former Kogi West Senator, Dino Melaye. This is not a political argument. It is a documented, court-verified illustration of systemic dysfunction. In August 2025, the FCT Internal Revenue Service (FCTIRS) filed criminal proceedings against Melaye at a Magistrate Court in Wuse Zone II, Abuja. The court filings are public record that have been reported by PREMIUM TIMES, TheCable, and multiple other outlets.
This piece is not an argument that the 2024 Tax Reform Acts are perfect. They are not. There are legitimate, substantive questions that deserve public scrutiny. The Nigeria Revenue Service’s capacity to administer a more complex framework is unproven. The risk of enforcement being applied selectively — against political opponents and ordinary traders, while well-connected high earners continue to face limited consequences — is real and must be watched.
According to the FCT-IRS, Melaye declared an annual income of ₦1.26 million in 2019 and paid ₦85,008 in personal income tax. In 2020, he declared ₦1.38 million and paid ₦100,000.08. In 2021, ₦1.55 million was declared, and ₦120,000 was paid. In 2022, with a declared annual income of over ₦6.5 million, he paid ₦1 million. These figures come from the revenue authority’s own administrative records.
For 2023 and 2024, the FCT-IRS conducted a best-of-judgment assessment after Melaye allegedly failed to respond to notices within the statutory 30-day window. His assessed liability was placed at ₦234.9 million for 2023 and ₦274.7 million for 2024 — a combined alleged outstanding liability of over ₦509 million. When the revenue service attempted personal service of the notice, efforts were reportedly unsuccessful; the summons was eventually pasted on the gate of his Maitama residence on 9 July 2025.
Let us be measured about what this case illustrates. Melaye has not yet been convicted of anything and is entitled to the full presumption of innocence. But the structure of his case reveals an instruction, regardless of its eventual outcome: a system in which an individual with a conspicuously high-consumption lifestyle was able, for years, to declare incomes that bore no visible relationship to his observed wealth, to pay sums that would be modest by the standards of a mid-level civil servant, and to apparently evade administrative service with some success. This is not unique to Melaye. He is, as the data suggests, an illustration of a pattern.
The everyday Nigerian — the driver, the civil servant, the market trader with a POS machine — has no equivalent protection from the tax system. Their compliance is often involuntary, structured into payslips or product prices. It is the highly visible, high-income citizen whose relationship with fiscal obligation has historically been largely voluntary. The 2024 reform is, at its core, an attempt to change that arithmetic.
What Informed Engagement Looks Like
This piece is not an argument that the 2024 Tax Reform Acts are perfect. They are not. There are legitimate, substantive questions that deserve public scrutiny. The Nigeria Revenue Service’s capacity to administer a more complex framework is unproven. The risk of enforcement being applied selectively — against political opponents and ordinary traders, while well-connected high earners continue to face limited consequences — is real and must be watched. The process by which some provisions were amended under political pressure, rather than technical review, is worth examining. These are serious questions for a serious public.
But there is a difference between serious, evidence-based engagement with a reform and reflexive opposition based on misinformation. The man who could not understand why his children’s school fees would not be raised deserves a clear, patient answer — and the answer is that they will not be, because the law explicitly protects them. The driver who does not know whether he owes anything deserves to know that he almost certainly does not, and that the requirement to file is not a trap but a mechanism for being formally included in a system that is supposed to serve him.
Nigeria is a country where, for every naira the government earns, more than forty-five kobo disappears into debt servicing before a single public service is delivered. The reform that addresses this is not the enemy of ordinary Nigerians. The system that created this situation, and the beneficiaries of that system who are loudest in opposing its reform, are far more deserving of public scrutiny.
The man who paid ₦85,000 in taxes as a sitting senator is not on the side of the driver at that Civic Talks forum. Understanding that distinction is, perhaps, the most important thing any Nigerian can take from this debate.
Tobechukwu Ezeuko, a public financial management specialist and policy analyst based in Nigeria, works across Switch Advisory and the Centre for Inclusive Social Development (CISD Nigeria).
All data cited in this piece is drawn from the primary sources. Readers are encouraged to follow the links and verify independently.
