Adejoh Bilkisu
As Nigeria gapples with profound sociaeconomic challenges, the need for comprehensive tax reforms has become increasingly urgent as major fiscal crisis faces a staggering annual financing gap of over $10 billion needed to meet its Sustainable Development Goals (SDGs).
With more than half of the population living in poverty, the nation’s current tax structure is failing to address rampant inequality. Tax evasion and avoidance, especially among the wealthiest Nigerians, are intensifying the country’s economic challenges, and civil society groups are calling for immediate reforms.
At the unveiling of Oxfam Nigeria’s report, Income and Wealth Inequality in Nigeria: Trends and Drivers, held in Abuja on Tuesday, Oxfam Nigeria and the Civil Society Legislative Advocacy Centre (CISLAC) emphasized the need for comprehensive tax reforms to address growing inequality.
The report reveals alarming statistics: Nigeria’s super-rich, comprising over 115,000 High Net-Worth Individuals (HNWIs), have a tax compliance rate of just 0.035%, with only 40 out of this group paying their taxes.
“This is a crisis in waiting,” said Auwal Ibrahim Musa, Executive Director of CISLAC.
“If we can enforce tax compliance among just a fraction of these individuals, the government could unlock over N4.59 trillion in revenue annually, which could significantly bolster the national health budget or reduce healthcare costs for millions of Nigerians.”
The report shines a light on six key areas of concern within Nigeria’s tax system:
Low Capital Gains Tax (CGT), Regressive Taxation, Inefficient Property Taxation
Others include Wealth Inequality, Challenges in Tax Decentralization, Underperformance of the VAIDS Program
The report also provides a roadmap to fixing Nigeria’s tax system and closing the SDG financing gap. Key recommendations include:
Establishing a High Net-Worth Individuals (HNWI) Unit,
Introducing a Wealth Tax ,
Reforming Capital Gains Tax, Exempting Basic Goods from VAT, other recommendations include
Property Tax Overhaul, Progressive Personal Income Tax, Inheritance and Gift Taxes,
Renegotiating Double Taxation Agreements (DTAs)
The urgency of these reforms cannot be overstated. Nigeria’s tax system, in its current form, is unsustainable and threatens to deepen economic disparities if left unreformed. Implementing these tax reforms would compel the wealthiest to contribute their fair share, easing the burden on Nigeria’s most vulnerable populations and aligning with the nation’s developmental goals.
The decisions made in the coming months will shape the fiscal and socioeconomic landscape of Nigeria for years to come. If the government can muster the political will to enforce these measures, it could turn the tide on poverty and inequality, ensuring a more equitable future for all Nigerians.
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