The Centre for the Promotion of Private Enterprise (CPPE) has issued a stark warning that Nigeria's ambitious tax reform programme risks failure if authorities pursue an aggressive, poorly-timed implementation strategy. The think tank emphasized that the current economic climate, marked by severe hardship and weak public trust, demands a gradual and sensitive approach.
Economic Hardship Fuels Public Resistance to New Taxes
In a policy note released on Sunday, January 4, 2026, and signed by its Chief Executive Officer, Dr Muda Yusuf, the CPPE framed the tax reforms as one of Nigeria's most significant fiscal restructuring efforts in decades. However, it cautioned that success hinges entirely on execution, not just the design of the law.
The warning comes as Nigerian households and businesses reel from the combined impact of recent policies like fuel subsidy removal and foreign exchange adjustments. With inflation soaring and purchasing power collapsing, new tax compliance demands have sparked significant anxiety and pushback, particularly on social media and within business associations.
The CPPE stated that past experience shows well-intended reforms can fail if implementation lacks proper sequencing, political sensitivity, and economic realism. It warned that poorly timed enforcement could devastate livelihoods and further erode the already fragile trust between citizens and the government.
The Informal Economy Poses a Major Challenge
A central pillar of the CPPE's caution relates to Nigeria's massive informal sector. Citing data from the National Bureau of Statistics, the group noted that approximately 40 million micro, small, and nano enterprises provide over 90% of national employment.
The think tank argued that strictly enforcing filing requirements, record-keeping standards, and penalties could overwhelm these operators, who often lack capacity and survive on narrow profit margins. An aggressive approach, they warned, might criminalize informality instead of encouraging voluntary formalization.
Additional concerns unsettling businesses and investors include proposals for mandatory reporting of certain bank transactions, which could subject pass-through funds to scrutiny. Proposed increases in capital gains tax and restrictions on rent relief have also caused apprehension among middle-income earners and investors.
CPPE Advocates for Phased, Pragmatic Approach
The CPPE advised tax authorities to initially focus enforcement efforts on large corporations, established small and medium-sized enterprises (SMEs), and high-net-worth individuals, who constitute the bulk of existing tax revenue. This, it argued, would be more pragmatic than targeting the vast informal sector immediately.
The organisation also highlighted the political dimension, cautioning that aggressive enforcement close to the 2026 pre-election period could trigger social unrest and destabilize the entire reform process.
While acknowledging that the reform framework includes protective provisions—such as tax exemptions for low-income earners, VAT relief on basic goods and essential services, and incentives for small businesses—the CPPE stressed that public skepticism remains high. This distrust stems from past experiences where tax hikes led to increased living costs without corresponding improvements in public services.
The CPPE concluded that tax reform must be treated as a long-term process, not a one-off event. It called for a phased, pragmatic strategy built on fostering trust, respecting economic realities, and choosing an appropriate political timing for implementation.
In related context, the Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has sought to calm fears regarding the new capital gains tax (CGT). He clarified that about 99% of investors in the Nigerian stock market would be exempt, specifically those selling shares worth up to ₦150 million annually with gains not exceeding ₦10 million.
