Autobayng News Team
Let’s not mince words. Nigeria’s new tax regime, which landed on our heads this January, is the most ambitious attempt to reshape the state since, well, since the last time someone had a “bright idea” in Abuja. They’re calling it a “generational reset”.
From where I sit, and from where millions of Nigerians actually sit – in traffic, in market stalls, in offices – wondering how to make ends meet, it feels more like a grand, high-stakes gamble.
The economists and the “Africa rising” brigade are nodding sagely. The rest of us are checking our pockets and bracing for impact.
The theory, as always, is impeccable and one I support. Nigeria’s tax-to-GDP ratio is a national embarrassment, fluctuating between 9% and 13%, depending on who you believe. For perspective, that’s not just low, it’s pathological. It means President Bola Tinubu’s government, in 2026, is functionally insolvent, unable to fund the basics of civilisation without borrowing or hoping for an oil-price miracle.
The reformers argue, correctly, that this is unsustainable. The new law, with its progressive rates that exempt the poorest and its sweeteners for small businesses, is meant to be the cold shower we need. It is the foundational stone for a post-aid Nigeria, where we finally pay for our own schools, hospitals and roads.
On paper, it’s a work of art. But Nigeria has a notorious habit of chewing up and spitting out beautiful theories.
Here’s the first rub. The government is trying to tax its way into modernity, but it is doing so in a country where the social contract isn’t just broken, it’s a ghost story we tell to scare children.
The state has failed to deliver the most basic services for decades. What, exactly, are we being asked to pay for? For gridlock? For darkness? For sending our children to schools where they learn under mango trees?
This isn’t a technical problem, it’s a crisis of faith. The middle class, with incomes already eroded by inflation, now sees itself as the designated ATM for a government that shows little evidence of knowing how to manage a kiosk, let alone an economy. The fear isn’t just of higher taxes, it’s of more money disappearing into the same bottomless pit.
Now, let’s talk about the people who truly keep this country running: the informal sector. The drivers, the market women, the vulcanisers, the tailors. A crucial piece of research from SBM Intelligence a few years ago laid bare something every Nigerian intuitively knows, but the government often ignores: 98% of Nigerians already pay taxes.
They pay daily, in cash, to a parallel government of agberos (street hustlers), union bosses and local council touts. This taxation is arbitrary, backed by the threat of violence, and offers precisely nothing in return. So when Abuja announces a “pro-poor” exemption for incomes under 800,000 naira (£400) a year, the woman selling tomatoes in Oyingbo market, in central Lagos, simply shrugs.
Her burden isn’t from the Federal Inland Revenue Service (newly renamed the Nigeria Revenue Service), it’s from the man who comes every morning for his “ticket”. The state isn’t introducing her to taxation, it’s asking her to switch loyalties. Why should she? What has the Nigeria Revenue Service ever done for her that the National Union of Road Transport Workers hasn’t done better (or worse)?
And then, there’s the spectacularly tin-eared move that perfectly encapsulates the disconnect. Just as the president’s committee was pushing a digital-first agenda, including e-invoicing to modernise compliance (as noted in its “Emerging Tax Matters” brief), another arm of the state signed that memorandum of understanding with the French.
At a moment when anti-French sentiment is ejecting la mission civilisatrice (civilising mission) from Mali to Niger, our government inks a “taxmen’s tea party” deal for Paris to help us mine our own taxpayer data. You couldn’t make it up.
While our neighbours are accusing France of neocolonialism through economic coercion, we are inviting them in for a front-row seat to our financial nervous system. The Northern Elders Forum called it “digital colonialism”, and for once, it isn’t being hyperbolic. It feeds the worst narrative: that this entire reform isn’t for our benefit, but to create a more efficient extraction machine. The optics are a masterclass in inflaming distrust.
This suspicion isn’t helped by the contradictory signals sent to the formal sector. While the new Nigeria Tax Act rightly raised the threshold for small companies, it also sparked panic over the possible reintroduction of physical tax stamps on goods.
As the Manufacturers Association of Nigeria rightly said, this would be a costly, bureaucratic nightmare that “could erode the gains of the Nigeria Tax Act 2025”. It’s this kind of erratic policymaking that makes businesses and remote workers, now squarely in the tax net, deeply sceptical. They wonder if the goal is genuine simplification or just new avenues for control and revenue grabs.
Looking across our region, Ghana’s government, faced with furious unions over a VAT on electricity, backed down. Kenya’s president, William Ruto, confronted by the gen-Z protests he helped inspire, tore up his finance bill. In both cases, organised public resistance forced a rethink.
In Nigeria, the government has ploughed ahead. This isn’t necessarily a sign of strength, but perhaps of a different calculation: that our discontent is too fragmented, too cynical, or too exhausted to coalesce into a single, unstoppable force. Yet. The lesson from Accra and Nairobi is that the permission to tax can be revoked by the people in a heartbeat. Our government thinks that we won’t find that heartbeat.
So, what does all this mean? For west Africa, Nigeria is the bellwether. If this reform succeeds, if revenue actually translates into visible, tangible improvements in public goods, it will be the strongest argument yet for African self-reliance. It would be a blueprint. But if it fails, it will be a catastrophic confirmation of every cynic’s belief that the problem isn’t the amount of money we have, but the integrity of the hands through which it passes.
The Tinubu administration has passed the law. The hard work starts now. Success won’t be measured in quarterly revenue reports from the Nigeria Revenue Service. It will be measured in the trust of the okada (motorcycle taxi) rider in Surulere who decides to register his business because he believes the state will protect him better than his “union”. It will be measured in whether the middle-class professional in Gwarinpa feels her increased tax deduction translated into a smoother commute or a better equipped clinic. It will be measured in whether we finally move from a country where tax is seen as a punitive loss, to one where it is understood, however grudgingly, as a collective investment.
The “Africa rising” concept is a lovely headline. Nigeria’s tax gamble, informed by data but challenged by history and instinct, is the gritty, complicated, and deeply fraught front-page story. We’ve chosen our path. Now we have to walk it through a landscape of deep distrust and higher expectations. The state has asked us to pay up. The question is: what, finally, will it deliver in return?
Cheta Nwanze is CEO at SBM Intelligence, a geopolitical risk advisory that focuses on sub-Saharan Africa
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