By
Comrade Igwe Prosper Ikechukwu
OVERVIEW
Since May 2023, the Tinubu administration has introduced wide-ranging fiscal reforms aimed at expanding government revenue, reducing subsidy dependence, and funding national development. While these objectives are legitimate, the timing, structure, and implementation of recent tax measures have raised serious concerns.
With inflation above 33%, a depreciating naira, and shrinking household incomes, many Nigerians now experience these reforms not as economic stabilisation, but as added pressure on an already strained economy. This report highlights key weaknesses in the current tax approach and outlines the African Democratic Congress (ADC)’s growth-oriented alternative.
KEY POLICY CONCERNS.
Poor Timing: Expanding taxes during record inflation and currency instability risks suppressing demand and worsening economic contraction.
Multiple and Overlapping Taxes: Businesses face collections from federal, state, and local authorities, increasing compliance costs and encouraging informality.
Limited Consultation: Several measures were introduced with insufficient engagement of labour, business groups, and civil society, weakening trust and compliance.
Regressive Digital
Levies: Flat levies on electronic transactions disproportionately affect low-income earners and small traders, undermining financial inclusion.
Narrow Tax Burden: Salaried workers and registered SMEs remain overtaxed, while luxury consumption and large informal wealth are under-captured.
Weak Administrative
Capacity: Complex rules imposed on fragmented systems increase harassment, leakages, and inefficiency.
Regulatory Ambiguity: Poorly drafted regulations create uncertainty for investors and businesses.
Eroding Social Contract: Increased taxation without visible improvements in public services fuels public distrust.
The African Democratic Congress (ADC) proposes a growth-first, equity-centred fiscal model focused on recovery rather than extraction. Key elements include:
A temporary pause on new broad-based consumption taxes
Simplification and unification of tax collection through digital platforms
Strong protections and incentives for small and micro enterprises
Progressive taxation that shields essential goods while targeting luxury consumption
Institutionalised stakeholder consultation and public fiscal transparency
This approach seeks to broaden the tax base fairly, improve compliance through trust, and stimulate productivity.
CONCLUSION
Nigeria’s fiscal challenges demand reform, but reforms that weaken economic activity and public trust are unsustainable. The current strategy prioritises rapid revenue mobilisation under severe economic stress, while the ADC’s proposal emphasises economic recovery, fairness, and transparency.
As the nation confronts rising hardship, the central question is no longer whether reform is needed, but which approach offers a credible path to shared prosperity.
IKECHUKWU WRITES FROM MEDIA NETWORK 2.0
