Tax Reform Chief Urges Focus on Wealthy, Not Poor, for Revenue Growth
By Patience Ikpeme
Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reform Committee, has called on Nigerian governments to fundamentally shift their tax collection strategy, urging a focus on the wealthiest 10 percent of the population rather than the struggling majority.
Speaking at the 2025 Finance Correspondents Association of Nigeria (FICAN) Annual Forum in Abuja, Oyedele criticized the current system, stating, “Virtually every state in Nigeria is chasing the bottom 90 percent to collect taxes. They are allowing the top 10 percent to have a field day.”
Oyedele emphasized that the core issue lies in the government’s failure to effectively collect taxes from high-income earners, a problem the ongoing tax reforms aim to rectify. He highlighted the disparity between personal income tax (PIT) revenue and the revenue generated from subsidy removals.
“Even if we declare a tax-free year for personal income tax in Nigeria, every state will still be financially well-off,” Oyedele asserted. “Do you know why? It means we would forgo N1.5 trillion from PIT, but we are already generating N10 trillion into the federation account from subsidy removal and naira floatation.”
To support small businesses, the proposed tax reform bills aim to raise the tax exemption threshold from N25 million to N50 million in annual turnover. Oyedele also shed light on Value Added Tax (VAT) collection, revealing that 97 percent of VAT revenue comes from the top three percent of taxpayers, primarily large corporations.
He proposed a change in VAT allocation, suggesting that VAT collected by these corporations should be credited to the states where their customers consume their goods and services, rather than just where their headquarters are located. “We propose that VAT collected by these large corporations should be credited to the states where their customers consume their goods and services, not just where their headquarters are based,” he explained.
Oyedele pointed out the significant revenue potential at the subnational level, noting that 85 percent of Nigeria’s major revenue sources, including personal income tax, property tax, stamp duties, and VAT, belong to state and local governments. He stressed the need for alignment between responsibilities and revenues, stating, “FAAC (Federation Account Allocation Committee) is not federal allocation; it is federation revenue that belongs to all tiers of government. Responsibilities and revenues should match.”
The proposed tax reforms, according to Oyedele, are designed to stimulate economic growth, improve competitiveness, and ensure shared prosperity. For businesses, the reforms will reduce risks, lower tax rates, and provide tax refunds.
Households will benefit from economic relief measures, lower tax burdens, and exemptions for low-income earners. The reforms also aim to enhance macroeconomic stability, boost revenue mobilization, and improve the tax-to-GDP ratio for the government.
Oyedele concluded by stressing the importance of optimizing revenue collection across all levels of government. “By shifting the focus away from taxing low income earners and struggling businesses, government can generate more revenue while reducing the financial burden on the poor and small businesses,” he said.
He further stated that state governments must address issues such as multiple taxation and the proliferation of taxing agencies to create a more efficient and fair tax system.
