Nigeria has embarked on a historic overhaul of its tax system, replacing laws inherited from its colonial past with a new regime that took effect on January 1, 2026. However, the reforms, championed by President Bola Tinubu, are mired in intense public debate, skepticism, and a fundamental crisis of trust rooted in the nation's enduring battle with corruption.
From Colonial Extraction to National Development
The newly enacted laws, signed by President Bola Tinubu on June 26, 2025, formally dismantle a fiscal framework largely designed during British colonial rule. For over six decades after Nigeria's 1960 independence, statutes like the Personal Income Tax Act (PITA), the Companies Income Tax Act (CITA), and the Capital Gains Tax Act (CGTA) remained in force. These laws were originally structured to extract economic value for the colonial power rather than foster local development and prosperity.
Other major statutes now reformed include the Stamp Duties Act, the Customs and Excise Management Act (CEMA), and the Education Tax Act. The Presidential Tax Reform Committee, led by Taiwo Oyedele, allowed a six-month window for public sensitization before the January 1 implementation. Despite this, the rollout has been contentious, facing predictable resistance from opposition politicians and leaving many citizens uneasy about the reforms' true intent and impact.
The Ghost of Aba and the Persistent Trust Deficit
A central, often overlooked issue threatening the reform's success is the deep-seated public belief that tax revenues will be stolen by corrupt officials. This fear is not new. It echoes the sentiments that fueled the historic Aba Women's Riots of 1929, a massive protest against oppressive British taxation where women revolted, partly driven by the conviction that collected funds would be misappropriated.
Analysts argue that this trust deficit is the administration's most urgent challenge. The government's messaging has heavily focused on the claim that individuals earning less than ₦800,000 annually will be exempt. However, this has been challenged by the Nigeria Labour Congress (NLC), which contends the laws were enacted without adequate consultation and could hurt the majority. The NLC has also renewed calls for a minimum wage increase, despite the next official review being slated for 2027.
Without clear, sustained, and transparent communication demonstrating how the new tax system will tangibly improve living standards, compliance risks being achieved only through coercive enforcement—a method reminiscent of the colonial era the reforms seek to erase.
Security Concerns and the Informal Sector Challenge
The potential for public discontent raises security concerns. Given Nigeria's history of tax-related unrest, there are legitimate worries about whether the government has undertaken adequate contingency planning. These concerns are amplified by recent security lapses, such as the deadly attack in Niger State following joint U.S.-Nigeria anti-terror operations, which suggested a lack of preparedness for aftermath scenarios.
Furthermore, a significant portion of Nigeria's economy operates in the informal sector. For the reforms to succeed, the new regime must deliberately embed incentives to encourage voluntary compliance from this vast, unregulated segment. Simply extending the formal tax net without addressing the core issues of transparency and perceived value will likely meet stiff resistance.
President Tinubu, a veteran of contentious reforms like the removal of the petrol subsidy and the managed floatation of the naira, appears determined to proceed against all odds. The administration insists the reforms aim to broaden the tax base, not increase the burden on already strained citizens. However, the ultimate test will be providing tangible proof that leakages in public finance have been blocked and that every naira paid will be accounted for and used for national development. Until then, the shadow of corruption and the ghost of Aba will continue to loom large over Nigeria's new tax era.
