Tax hikes: Tinubu’s aggressive revenue extraction will stifle growth

As Lagos State governor, Bola Tinubu had a reputation for squeezing water from a stone by extracting taxes from even the most unlikely people. Stories still abound in Lagos of how menacing tax collectors forced struggling market women and micro traders to pay taxes. For Tinubu, the end always justifies the means. And the end, leaving aside the self-interest, was to significantly increase the state’s internally generated revenue (IGR); the means was multiple taxes and levies. Well, it worked! Lagos State’s IGR rose from N14.6bn a year in 1999, when he became governor, to N83.02bn in 2007 when he left office.

Now, as president, Tinubu wants to replicate the Lagos “miracle” at the federal level. Even without his tax reform bills becoming law yet, President Tinubu has aggressively focused on revenue mobilisation. Last month, the Federal Inland Revenue Service, FIRS, announced a record revenue intake of N21.6 trillion in 2024, a 76 percent increase from the N12.4 trillion in 2023. Zacch Adedeji, the Executive Chairman of FIRS, described 2024 as a year of “exceptional performance” and set an ambitious target of N25.2 trillion for 2025.

Read also: 2024 Tax bill could trigger capital flight, undermine free zone revenues, NACCIMA warns

But here’s the rub. The revenue-generation feat would be absolutely commendable only if it is achieved through economic expansion, the widening of the tax net and increased use of technology to improve tax collection, rather than through higher tax burdens on businesses and the people. Unfortunately, the tax burdens on Nigerian businesses and citizens have grown astronomically since the inception of the Tinubu administration, with its tendency to hike taxes on businesses and consumers. From the hike in electricity tariff to the increase in ATM transaction fees and the introduction of toll payments at federal roads and airports, Tinubu’s government is aggressively extracting taxes from Nigerians of all hues.

Recently, the government imposed a 4 percent customs charge on all imports, while the Nigerian Ports Authority (NPA) introduced a 15 percent tariff increase at the ports. The Nigeria Employers’ Consultative Association (NECA) said the new customs levy would devastate the economy and increase the misery of ordinary Nigerians. The Organised Private Sector (OPS), which includes the Manufacturers’ Association of Nigeria (MAN), warned that the NPA’s tariff hike would lead to the closure of many businesses, and force importers to divert cargoes to neighbouring countries. Truth is, every extra levy or charge on imports is a tax on consumers, a burden on manufacturers and a driver of inflation, with all its consequences.

In May last year, Professor Usman Yusuf, a member of the Northern Elders Forum, said on Channels Television that Tinubu’s economic team “looks more like tax collectors than economists.” He was absolutely right. Although Tinubu is not a socialist, being a multi-billionaire oligarch, he runs a government that follows the socialist tax-borrow-and-spend philosophy. But such governments always preside over acute economic stagnation, high chronic unemployment and abysmally low living standards – all of which bedevil Nigeria!
The universal truth is that economic growth is the only sustainable source of higher tax revenues and higher living standards. For when the economy is growing, resulting in business expansion and more and better jobs, company income tax, personal income tax, VAT, etc will generate more revenue, enabling the government to fund its budgets and raising living standards for everyone. Conversely, when an economy is not growing robustly, it’s hard to hike taxes without stifling growth prospects and worsening living standards.

As Martin Wolf, the Financial Times chief economics commentator, rightly put it, “the main source of greater prosperity and higher fiscal revenue must be faster economic growth.”

Surely, the best way to engender higher economic, productivity and employment growth is to remove the supply-side barriers to economic activity and business expansion. The starting point is to create stable macroeconomic conditions. But every government must also remove the supply constraints of high tax and regulatory burdens because such barriers undermine the competitiveness and profitability of businesses and prevent them from investing, expanding and creating jobs. Unfortunately, Nigeria doesn’t only lack sound macroeconomic conditions, its huge supply constraints hinder private sector growth.

Read also: Governors meet over tax reforms, others

Think about it: interest rate is 27.50 percent, the exchange rate is around N1,600/$, and inflation is 34.80 percent (forget the recent artificial decline caused by the rebasing of the CPI). On top of those, there are high taxes, levies and charges. How can any economy grow in those conditions? How can businesses expand and create jobs in those circumstances? The consequences are inevitable. According to the IMF, Nigeria’s per capita income was $835 in 2025, dropping from $877 in 2024. Just over ten years ago, in 2014, it was $3,223. Sadly, Tinubu doesn’t see how, amid economic stagnation, hiking taxes, levies and charges can deepen poverty. It is utter economic illiteracy!

Still on Olukoyede’s EFCC

Columnists and newspapers expect, and even welcome, rejoinders. So, I welcome the fact that the Economic and Financial Crimes Commission (EFCC) felt compelled to respond to my recent intervention in which I said the EFCC was too incompetent, too corrupt and too politicised to tackle corruption in Nigeria. In a piece published in several newspapers, titled “Olukoyede’s record-breaking strides in EFCC and Olu Fasan’s errors of analysis”, Dele Oyewale, EFCC’s head of media and publicity, took issue with me.

He reeled off Olukoyede’s “achievements”, suggesting that corruption had reduced under him. Indeed, Olukoyede himself later said that Nigeria “has recorded substantial progress in the anti-corruption fight”. But that contrasts with the views of Musa Aliyu, chairman of the Independent Corrupt Practices Commission (ICPC), who recently said corruption thrives in Nigeria “despite the efforts of the anti-corruption agencies.”

Of course, Oyewale is entitled to defend his boss and his organisation, but he goofed by attempting to impugn my character and tar me with the brush of corruption. He wrote: “Fasan’s backgrounding of his visceral attacks of Olukoyede and the EFCC clearly shows malice, prejudice or a naked dance to please some paymasters.” He added: “Fasan’s tirade and gratuitous insults on the EFCC and its hard-working Chairman is another parade of corruption in bold statements.”

It is a shameful escapism to regard my patriotic and well-intentioned criticism of the EFCC as a “parade of corruption”. What an appalling ad hominem fallacy! And for the avoidance of doubt, I have no paymasters. By the grace of God, I have been writing a newspaper column in Nigeria every week pro bono – I repeat, pro bono – for over ten years, and no one has ever told me what to write. My only motivation is my deep love for Nigeria, and my desire to contribute, through my writings, to its development. Truth is, Nigeria suffers from chronic and acute leadership and institutional failures, which foster endemic corruption. I have, as a columnist, addressed those issues forcefully, speaking truth to power, under successive governments since 2014. So, I have no malice or prejudice against Olukoyede!

Read also: Senate to begin public hearing on tax reforms bills Monday

In an article titled “Olukoyede’s challenge, Fasan’s concerns and Nigeria’s reality: A psychologist’s take on corruption”, John Egbeazien Oshodi, a US-based police scientist, wrote: “The EFCC doesn’t control the system; it’s a caged tiger that can’t attack where it truly matters.” That, precisely, was my point. Sadly, Olukoyede’s EFCC is in denial!