Tax Overhaul Must Fix Govt Waste, Build Trust – Ex-NERC Chairman

Nigeria’s tax reforms will fail to deliver citizen benefits or broad economic growth without accountability in government spending at federal and state levels, warned a public policy expert, Sam Amadi.

Speaking at a BusinessDay tax reform conference in Abuja on Thursday, Amadi stressed that reforms—designed to boost revenue, streamline processes, and close loopholes—must also target the expenditure side of governance.

“You need to balance the other side, which is that this bulk of money that comes to the states,” he said.Amadi pointed out that much of Nigeria’s tax revenue, including value-added tax (VAT), flows to states and local government areas, which bear growing responsibility for social protections.
For reforms to succeed, these entities must justify increased funds through transparent spending, he added.

Without this, Nigeria risks becoming a “tax enclave,” Amadi, a former chairman of the Nigerian Electricity Regulatory Commission (NERC) cautioned, where aggressive taxation yields rising revenues but no development or better services.

“Every tax is the state taking from the individual. That taking has a social justice component. It rests on the assumption that citizens themselves are net beneficiaries of that subsidy,” he said.

“So, if our government officials take the money and use it for politics, as is happening in many states, then it might not still drive development. We might move from an oil enclave to a debt enclave to a tax enclave, where you have very aggressive taxation but still a stunted economy.

”Public trust is essential, Amadi emphasized: Citizens will comply with taxes only if they see funds used responsibly. He criticized tax experts for treating taxation as a mere technical exercise, ignoring its political and social dimensions. “Tax is not just income. Tax came after the value had been expanded. People together organised a great value,” he said.