In a moment that could define Nigeria’s economic trajectory, the Nigerian Governors Forum (NGF) recently endorsed the federal government’s proposed tax reforms. On the surface, this seems like a decisive step toward addressing the country’s chronic revenue challenges. But beneath the applause lies a pressing question: will these reforms truly serve the interests of Nigerians, or are they just another political exercise disconnected from the realities on the ground?
Nigeria’s economic landscape is precarious. With a tax-to-GDP ratio of just 6%, one of the lowest in the world, the country is losing out on much-needed revenue. Compare this to the global benchmark of 15-20% recommended by the International Monetary Fund (IMF), and it becomes clear that Nigeria is running on fiscal fumes. But while reforms are necessary, the way they are designed and implemented will determine whether they bring relief or deepen hardship for millions of Nigerians already struggling with inflation, unemployment, and rising living costs.
At the heart of this matter lies the governors’ role. As leaders closest to the people, they wield significant influence over the success or failure of national policies. Yet, their recent endorsement of the federal government’s tax reform proposals raises more questions than answers.
A Nation in Fiscal Crisis
Nigeria’s reliance on oil revenues has left its economy vulnerable to global price shocks and declining production. The government’s push to diversify its revenue streams by increasing tax collection is both logical and overdue. But history shows that taxation in Nigeria has often been poorly executed, leading to inefficiencies, corruption, and inequities.
Take the Value-Added Tax (VAT), for example. Introduced as a means of boosting revenue, its administration has been fraught with problems. Many states, particularly those outside Nigeria’s oil-producing regions, have long complained of receiving far less than their fair share of VAT allocations. This has exacerbated regional inequalities and bred resentment.
Will the new tax reforms address these systemic issues, or will they perpetuate the status quo? For the average Nigerian, the answer could mean the difference between financial stability and deeper poverty.
The Human Cost of Taxation
For millions of Nigerians, taxation is more than just an economic issue—it’s a question of survival. With inflation rates in double digits and the recent removal of fuel subsidies driving up costs, households are under immense pressure. Even small increases in taxes can have a disproportionate impact on low-income families, forcing them to choose between essential expenses like food, healthcare, and education.
Small and medium-sized enterprises (SMEs), the backbone of Nigeria’s economy, also stand to be affected. These businesses, which provide livelihoods for countless Nigerians, are already grappling with high operating costs, poor infrastructure, and limited access to credit. Any additional tax burden could stifle their growth or push them into the informal sector, where compliance is even harder to enforce.
Governors, as the custodians of their states’ economies, have a unique responsibility to protect these vulnerable groups. Yet, their endorsement of the reforms seems to have come without meaningful consultation with stakeholders or a clear strategy for minimizing the adverse impacts.
A Troubling Pattern of Compliance
This is not the first time Nigerian governors have uncritically supported federal initiatives. From the implementation of VAT to other revenue-sharing policies, there is a troubling pattern of governors aligning with federal directives without fully interrogating their implications.
One of the most glaring issues with the current tax reform proposal is the lack of transparency. While the federal government has outlined broad goals – simplifying the tax system, broadening the base, and improving compliance – the specifics remain vague. How exactly will these reforms be implemented? What mechanisms are in place to ensure accountability?
In a country where trust in government is fragile, these questions are not trivial. Nigerians need assurances that their taxes will be used for public good and not lost to corruption or inefficiency.
Learning from the Past, Looking to the Future
Countries like Rwanda and South Africa offer valuable lessons in tax reform. Rwanda, for instance, has simplified its tax code and invested in digital infrastructure to improve compliance and reduce corruption. South Africa, despite its challenges, has managed to achieve a relatively high tax-to-GDP ratio by fostering trust between the government and taxpayers.
These examples underscore the importance of transparency and public engagement—qualities that have often been missing in Nigeria’s approach to taxation.
Governors have a critical role to play in bridging this gap. By engaging directly with their constituents, they can educate the public about the importance of taxation while addressing fears and misconceptions. Town hall meetings, stakeholder consultations, and clear communication are essential tools for building trust and ensuring that the reforms are seen as a collective effort rather than a top-down imposition.
A Call for Accountability and Vision
The success of the proposed tax reforms will ultimately depend on how revenues are utilized. Nigerians need to see tangible benefits from their contributions—whether it’s better roads, improved healthcare, or access to quality education. Without these visible investments, skepticism and resistance will only grow.
Governors must also advocate for equitable revenue sharing. States that contribute significantly to the national tax pool, particularly those with oil resources, deserve a fair share of the returns. Addressing these longstanding disparities is key to fostering national unity and economic stability.
Finally, the reforms must prioritize the informal sector, which accounts for a significant portion of Nigeria’s economy. Bringing this sector into the tax net requires more than enforcement; it demands incentives, education, and a simplified system that encourages voluntary compliance.
The Path Forward
The Nigerian Governors Forum’s endorsement of the federal government’s tax reforms could mark the beginning of a new chapter in Nigeria’s economic development. But for this to happen, the governors must move beyond symbolic gestures and demonstrate genuine leadership.
This means holding the federal government accountable, ensuring that tax revenues are transparently managed, and advocating for policies that prioritize the welfare of their constituents. It also means listening to the voices of ordinary Nigerians—those whose lives will be directly impacted by these reforms.
Taxation is not just a means of raising revenue; it is a tool for building a fairer, more prosperous society. The question now is whether Nigeria’s governors will rise to the challenge or fall back into the familiar pattern of political expediency.
For millions of Nigerians, the stakes couldn’t be higher. It is time for their leaders to show that they are not just followers of federal policies, but champions of the people they were elected to serve.
.Ogbodo, a former broadcaster and currently, PR consultant to Geometric Power, writes from Aba.
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