Manufacturers and tax experts across Nigeria are raising the alarm over what they describe as an opaque, inconsistent, and burdensome tax regime that threatens to undermine business growth, stifle productivity, and derail the country’s development efforts.
Speaking during a paper presentation at the 27th Annual Tax Conference of the Chartered Institute of Taxation of Nigeria (CITN) in Abuja, industry players and policy experts called for a transparent, predictable, and equitable tax system, where fiscal decisions are consultative and outcomes are visible to taxpayers.
Ajayi Kadiri, Director-General of MAN, voiced strong concerns about the rising cost of doing business, especially in rural areas where multiple taxes from local and state authorities are driving up production costs.
“We Can’t Plan Under Fiscal Chaos. Manufacturing in my village is extremely expensive. Multiple levies, some without a legal basis, are suffocating businesses. You can wake up one day and see a 50% increase in port charges without prior consultation. That’s not policy that is chaos,” he said.
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Kadiri also criticised the proliferation of tax heads, describing it as a barrier to compliance.
“I have 2,500 vendors; some hide their signboards just to avoid paying taxes. If we reduce and harmonise the number of taxes, say nine instead of thirty, compliance will increase. Simplicity breeds compliance”, Kadiri added.
He further emphasised the need for tax justice and data-driven assessments.
“You can’t assess tax liability based on assumptions or facial expressions. Let’s use data to evaluate business capacity and set fair obligations”, he noted.
The call for a more equitable system was echoed by government officials, economists, and tax professionals who stressed that taxation must be seen as a social contract, not just a revenue tool. Speakers agreed that visible service delivery, transparency, and accountability are central to building public trust and improving compliance.
Tope Fasua, Special Adviser to the President on Economic Affairs, emphasised the importance of stakeholder engagement in shaping a sustainable tax system.
In his paper presentation on “Taxation and Stakeholder Engagement: Ensuring Transparency, Sustainable Practices,” Fasua outlined a framework involving open communication, defined roles, regular monitoring, and early conflict resolution.
“We must create a tax system that allows Nigerians to not only understand where their money is going but to feel like they’re part of the process. It’s about building a fiscal culture that is inclusive, transparent, and performance-driven,” he said.
Fasua noted that a significant portion of Nigeria’s economy remains informal and undocumented, limiting the tax base.
“There are billionaires in Nigeria that we don’t know because they operate in the shadows. We’re now using technology to formalise these activities and bring more people into the tax net.”
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He revealed that ongoing policy amendments aim to improve fiscal autonomy and accountability at the state and local levels, ensuring that revenues generated are reinvested in local development.
Ayodele Subair, Executive Chairman of the Lagos State Internal Revenue Service (LIRS), highlighted the imbalance between the taxes Nigerians pay both official and unofficial and the services they receive.
“We talk a lot about tax evasion, but many Nigerians already pay what we call ‘black taxes’, school fees, security, healthcare, road repairs services that the government should provide,” he said.
Subair stressed the need for government to justify tax collection through improved service delivery.
“People feel cheated when they pay taxes and still provide their own infrastructure. If we want more compliance, we need more trust, and trust comes from results”, Subair said.
He also urged professionals and public sector workers to align with performance-driven expectations, noting that many job losses stem not from lack of skills but from lack of value addition.
“Your job isn’t automatic. Someone is paying for it, and that someone expects results”, he added.
Paul Alaje, Chief Economist at SPM Professionals, argued that taxation must be used to reduce inequality and stimulate inclusive growth.
He cited a recent World Bank report that highlighted rising poverty in Nigeria and emphasized that tax revenues must translate into better infrastructure, education, and healthcare.
“Taxation should not be viewed as punishment. It’s a tool for redistribution. But if people don’t see roads, hospitals, and schools in return, the whole system loses credibility,” Alaje said.
He also questioned the relevance of local governments, noting their near invisibility in citizens’ lives.
“If they can’t manage basic services like water, waste, or markets, then they are failing the people they are meant to serve”, he said.
Albert Folorunsho, Managing Consultant at Kreston Pedabo, warned that excessive penalties and interest on unpaid taxes are counterproductive.
“If you owe ₦1 million, penalties can push it to over ₦2 million. That doesn’t encourage payment—it drives businesses underground”, he stated.
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Folorunsho advocated for balance, stating that while taxpayers must fulfill their obligations, authorities must also be accountable and fair.
He pointed to Brazil’s model, where tax usage is documented and made public, reinforcing trust in the system.
Some speakers commended Lagos State’s efforts, describing the state as a “construction site” due to ongoing infrastructure projects. “When people see what their taxes are funding, better roads, rail systems, and hospitals as they are more willing to pay. That’s the essence of the social contract,” one participant noted.
However, others insisted that such models must be replicated across all states, not just in a few regions.
Speakers advocated for harmonised tax systems, reduced levies, and improved communication between government and taxpayers.
“Taxation is not just a financial obligation, it’s a reflection of the social contract between the government and its people. When people see their money at work, they are more willing to contribute. That’s the future we must build”, Subair noted.
