Nigeria's ambitious new tax reforms, intended to streamline revenue and boost equity, have instead triggered a wave of price instability across markets. Less than two weeks after implementation, the policy's first casualty appears to be price stability, not from the legislation itself, but from widespread fear, misinterpretation, and opportunistic price gouging by businesses.
Market Exploitation and Public Outrage
Across the country, from Lagos's bustling Mile 12 Market to upscale restaurants, traders and service providers are citing the new tax template to justify arbitrary price increases. These hikes bear little relation to actual tax obligations, turning public anxiety into higher costs for everyday goods and services.
A resident in Cele, Isolo named Muna reported paying an extra N400 on a POS withdrawal of N20,000, on top of the standard N200 charge. On social media platform X, numerous Nigerians shared similar experiences. A user, @ADE1_UTD, recounted a seller attempting to add N300 to a N700 purchase, blaming 'tax'.
Specific surges documented by consumers paint a stark picture. Trader Folashade Bello in Oshodi market noted chicken prices rising from N6,000 to N6,600 per kilogram. POS charges for a N5,000 withdrawal climbed from N100 to N150, while an extra N500 was added to N10,000 fuel purchases. In one viral instance, a restaurant bill was inflated by N23,000 under the guise of the new government policy.
Investment Fears and Professional Critique
Beyond retail chaos, investment professionals warn of the reforms' impact on capital formation. Ifeanyi Ubah, Chief Investment Officer at VNL Capital Asset Management, noted that while exemptions protect low-income earners, provisions on capital gains tax could deter investors.
He highlighted that the Nigerian Exchange Limited (NGX) all-share index suffered a catastrophic N6.5 trillion loss in November 2025 due to panic selling over capital gains tax uncertainty, despite a strong recovery later.
Professional services firm KPMG Nigeria published a review identifying critical gaps in the framework. Key concerns include the lack of inflation adjustment for capital gains in a high-inflation economy, unclear rules on indirect share transfers by non-residents, and restrictive foreign exchange deduction rules that could lead to double taxation.
Policy Defence and Implementation Challenges
The Presidential Fiscal Policy and Tax Reforms Committee responded to critiques, stating that KPMG's analysis reflected a misunderstanding of policy intent. On capital gains, they clarified the tax is not a flat 30% and that 99% of investors are entitled to unconditional exemption.
They defended the FX deduction rule as a deliberate policy to stabilise the naira and the VAT-linked deductibility as an anti-avoidance measure. The Committee acknowledged that clerical inconsistencies may occur in such a major overhaul and are being addressed.
However, analysts like personal finance coach JP Attueyi explain the transmission mechanism: every business tax indirectly affects the consumer, forcing petty traders to raise prices to cover new compliance costs. This creates a risk of 'second-hand inflation' from unethical practices, prompting calls for urgent government intervention to clarify the reforms and curb exploitation.
