Enforce Nigeria’s Tax Act 2025—Then Amend What Needs Fixing

Calls to suspend Nigeria’s Tax Act 2025 are understandable in an anxious economy—but they are still the wrong prescription. Suspension is not a neutral pause; it is a policy decision to keep Nigeria trapped in a tax system defined by complexity, multiplicity, and leakage. And at this moment, Nigeria is already at the implementation stage: the President has reiterated that the new tax laws should take effect from 1 January 2026, despite calls for delay.

Nigeria’s real problem is not that we tax too much. It is that we tax badly. We have too many small taxes and levies, collected by too many hands, under rules that are often unclear to the average citizen and burdensome for honest businesses. That kind of system does not create prosperity; it creates informality and mistrust. This is why the reform effort has repeatedly stressed simplification and harmonisation—reducing the number of taxes to a smaller, more workable set.

The 2025 tax reform package—signed into law as four Acts (Nigeria Tax Act, Nigeria Tax Administration Act, Nigeria Revenue Service Act, and Joint Revenue Board Act)—is an attempt to reset the architecture. Its basic logic is sound: simplify the rules, modernise administration, and expand compliance in a way that protects low‑income Nigerians while improving revenue efficiency.

Consider the moral foundation of taxation. The price of civilisation is not paid only in elections; it is paid in the mundane, recurring discipline of citizens contributing to the common purse and insisting on value for money. Stable domestic revenue is how countries build roads that last, schools that teach, hospitals that function, and security institutions that protect rather than prey.

Most Nigerians already know our vulnerability: oil. Oil revenue rises and falls with prices, production, and global politics. When oil disappoints, we borrow; when borrowing expands, debt service crowds out development. A modern tax system is the bridge out of that cycle. It is not glamorous. But it is freedom—freedom from budgeting by crude oil price.

Critics often talk as if the Tax Act 2025 is designed to punish workers. The reform direction—at least as debated and amended through the legislative process—includes explicit protections, including exemption of minimum‑wage earners from personal income tax. And the broader logic of the reform programme is to avoid taxing hardship while widening compliance among those with genuine capacity to pay.

So why is the debate so heated? One reason is misinformation. A troubling feature of the national conversation is that even senior figures have complained that many critics condemn the reforms without reading the bills or the final laws. When we fight shadows, we miss the substance.

The substance is this: if you want government that works, you must be willing to fund it in a fair way. A tax system that relies on harassment levies—fees that tax existence rather than profit—will decapitalise small businesses and drive people out of the formal economy. That hurts employment and growth. A more coherent system, with fewer taxes that are actually collectible, is better for citizens and for enterprise.

Digitisation is the second substance. Nigeria’s revenue losses are not primarily philosophical; they are administrative. Where cash transactions dominate, where receipts can be invented, and where data cannot be matched, leakages multiply. The tax administration framework explicitly supports technology‑enabled processes and even contemplates electronic fiscal systems for VAT recording and reporting. This is how you move from rules on paper to revenue in the treasury: fewer manual processes, less discretion, more traceability.

Two clarifications matter.

First: simplification is pro‑business. When the number of taxes is reduced and rules are consolidated, compliance becomes cheaper. Small and medium‑sized enterprises—Nigeria’s job engine—benefit the most because they cannot afford teams of tax advisers. A simplified system also makes enforcement fairer: fewer grey areas mean fewer opportunities for discretion and rent‑seeking.

Second: better tax is better federalism. Clearer boundaries between what the federal government administers and what states administer reduces conflict and double taxation. It also encourages states to focus on improving their own systems rather than competing through overlapping levies. The Presidential Committee’s design logic is to harmonise and simplify, not to create a new harassment machine.

I also want to speak plainly about excise duties. In many economies, excise is a predictable way to tax specific consumption while protecting production. In Nigeria, excise has often been narrow, uneven, and politically fragile. A modern, data‑driven framework can help capture legitimate excise and similar consumption‑based revenues without turning every checkpoint into a revenue trap. This is exactly why digital tools—traceability, electronic reporting, and risk‑based audits—are central to reform.

Of course, no reform is perfect at birth. If there are regressive features, we should correct them—quickly. If implementation timelines are too harsh for households or small businesses, we should phase them. If there are drafting errors or disputed versions, we should reconcile them transparently through a clean technical‑amendment process. But we should do these things while keeping the reform moving forward.

Here is a practical compromise: implement the Act, then publish a first‑year “amendment ledger.” Track problems openly, measure impacts, and adjust the law with evidence rather than rumours. That is how serious countries reform.

Nigeria cannot build a 21st‑century economy on a 20th‑century tax architecture. The Tax Act 2025 is a foundation—imperfect, yes, but necessary. Enforce it. Fix it. Let it work.

–Yakubu is the DG, Budget Office of the Federation.