Nigeria’s tax revolution will fail unless it confronts power

Nigeria’s fiscal crisis is not a mystery. It is not caused by a lack of laws, policy papers, or technical expertise. It is the result of a political settlement that has, for decades, allowed wealth and power to sit comfortably outside the reach of the taxman. On January 01, 2026, that settlement was challenged, at least on paper, by the activation of four sweeping tax laws designed to redraw the boundaries of who pays, who collects, and who is accountable. Whether this moment becomes the birth of a modern revenue state or just another round of administrative theatre will depend less on the elegance of the statutes and more on whether Nigeria is finally willing to tax its own elite.

Nigeria’s tax-to-GDP ratio has long been an international embarrassment. At under 15 percent, it sits far below the levels needed to finance infrastructure, education, healthcare, or even basic state capacity. Successive governments have blamed informality, weak administration, and narrow tax bases. These problems are real. But they are not the core of Nigeria’s fiscal failure. The real problem is that Nigeria’s tax system has never been designed to confront power.

Read also: Nigeria’s tax revolution has begun – but precision, not ambition, will determine its success

For decades, taxation in Nigeria has operated on a simple, brutal logic: those who are easiest to tax are taxed the most. Salaried workers face PAYE. Consumers pay VAT and excise duties. Small businesses are harassed by multiple levies. Meanwhile, politically connected corporations, import cartels, oil traders, telecom giants, and financial institutions negotiate, delay, underreport, or avoid. The result is not merely low revenue; it is a tax regime that deepens inequality and corrodes legitimacy.

Seen through this lens, the 2025–2026 reforms raise a more unsettling question than whether statutes are well drafted: do these laws change who pays?

The consolidation of Nigeria’s tax laws into a single code is presented as a technical achievement, and it is. Simplification reduces compliance costs and makes administration easier. But clarity alone does not create justice. A beautifully organised tax code that still allows powerful actors to escape will only make exploitation more efficient.

“Nigeria’s tax reform, then, is not really about tax. It is about whether the Nigerian state is ready to discipline its own elites.”

Likewise, the transformation of the Federal Inland Revenue Service into a Nigeria Revenue Service looks like institutional progress. Centralisation, data integration, and expanded mandates can strengthen enforcement. But institutions are not neutral. In countries where revenue agencies are politically protected and professionally insulated, they become instruments of fairness. In countries where political elites can interfere, they become tools for selective punishment.

Nigeria’s history gives little reason for optimism. From customs to oil royalties to company income tax, enforcement has always been toughest on those without political cover. Unless the new Nigeria Revenue Service is insulated from political interference and elite capture, it risks becoming more powerful but not more just.

This is why many of the debates currently dominating elite policy circles are dangerously misplaced. Analysts obsess over drafting ambiguities, capital gains indexation, and the fine print of withholding tax. These are not trivial issues, but they are not decisive. India, Brazil, and Indonesia operate with far more complex and ambiguous tax laws than Nigeria and still collect far more revenue. What they have, and Nigeria lacks, is the political will to make powerful people pay.

Consider capital gains tax. Yes, taxing nominal gains in an inflationary economy is economically imperfect. But Nigeria’s investment problem is not primarily driven by capital gains. It is driven by currency instability, capital controls, insecurity, and weak contract enforcement. Fixing the capital gains design without fixing these will not unlock investment.

What will unlock revenue, however, is something far more uncomfortable: breaking the culture of negotiated compliance. In Nigeria today, tax is not a rule; it is a bargaining process. Large firms hire consultants to negotiate liabilities. Politicians intervene on behalf of allies. Debts are settled at discounts. Penalties are waived. This system does not fail accidentally. It fails by design.

The Joint Revenue Board and Tax Ombud structures created by the new laws could, in theory, introduce accountability and coordination. But institutions only matter when they have teeth. If the Ombud cannot challenge powerful agencies, if the Tax Appeal Tribunal is slow or captured, and if data is not shared across tiers of government, then these bodies will simply add new layers to an already bloated bureaucracy.

Digitalisation offers Nigeria its greatest opportunity to break this pattern. Countries that have successfully increased tax compliance did not do so by perfecting legal language; they did so by closing information gaps. When bank data, customs records, company registries, and payroll systems are integrated, evasion becomes harder and discretion shrinks. Technology, not rhetoric, is the real reform.

Read also: Nigeria’s tax reforms: Separating facts from fear matters

Even technology will fail if it is not politically protected. An integrated tax database that can be switched off for the powerful is worse than useless; it becomes a weapon of selective enforcement.

Nigeria’s tax reform, then, is not really about tax. It is about whether the Nigerian state is ready to discipline its own elites.

If these reforms merely increase the burden on workers, consumers, and small businesses while leaving politically connected capital untouched, they will deepen cynicism and resistance. Tax morale cannot be built on injustice. People do not refuse to pay tax because they are immoral; they refuse because they can see who is getting away with not paying.

If, however, Nigeria uses this moment to build a tax system that is data-driven, politically insulated, and ruthlessly even-handed, the payoff will be enormous. Not just in revenue, but in legitimacy. A state that can tax fairly is a state that can govern.

That is the real test of the 2026 reforms. Not whether the laws are elegant, but whether power is finally brought to account.

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