Tax Bills: We must stop taxing poverty, capital – Oyedele

Abuja Bureau Chief

The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr. Taiwo Oyedele, has criticized Nigeria’s current tax system, stating that it is not conducive for economic growth as it disproportionately taxes the poor and capital instead of focusing on profits

Speaking at the 2025 Annual General Meeting (AGM) of the Finance Correspondents Association of Nigeria (FICAN) in Abuja over the weekend, Oyedele emphasized the need for a tax system that encourages business growth rather than stifling it.

The multiplicity of taxes and taxing agencies places an excessive burden on businesses, leading to frustration and closures across the country,” he said.

According to him, the only effective tax system is one that supports business expansion before taxing profits, as is the practice in other developed economies.

The proposed tax reforms aim to consolidate multiple taxes and introduce a progressive Personal Income Tax (PIT) structure, which includes:

Exemption for earnings up to ₦800,000

15% tax on the next ₦2.2 million

18% tax on the following ₦9 million

21% tax on the next ₦13 million

23% tax on the next ₦25 million

25% tax on incomes above ₦50 million

For businesses, Corporate Tax rates will be adjusted as follows:

Reduction from 30% to 27.5% in 2025

Further reduction to 25% in 2026

25% tax on incomes above ₦50 million

For businesses, Corporate Tax rates will be adjusted as follows:

Reduction from 30% to 27.5% in 2025

Further reduction to 25% in 2026

Exemption for businesses with annual revenue below ₦50 million

Oyedele reassured state governors that the Tax Bills currently before the National Assembly will ultimately increase their revenue, despite concerns that they might lose funds.

He noted that approximately 85% of major tax revenues—including Personal Income Tax, Property Tax, Land Tax, and Value Added Tax (VAT)—are primarily state-collected revenues.

However, he lamented that many state governments have been reluctant to implement Property Tax, despite its potential to generate significant income.

“Personal Income Tax in Nigeria contributes only about 10% of total tax revenue, whereas globally, the average is around 30%,” he observed.

Oyedele identified three key revenue sources that are shared between the federal, state, and local governments:

Corporate Income Tax

Customs Duties

Petroleum and Solid Minerals Revenue

Taxing the Wealthy vs. Low-Income Earners

He defended the strategy of exempting low-income earners while taxing the wealthy, citing South Africa as an example where just 1% of the population contributes over 90% of total Personal Income Tax revenue.

“The impact of the proposed tax reforms will include economic growth, increased competitiveness, shared prosperity, and improved revenue mobilization,” he stated.

For Businesses:

Lower tax burden

Tax payment in Naira

Refund of input VAT credit

For Households:

More disposable income for low-income earners

Tax waivers on essential foods

Tax suspension on fuel

For Government:

Macroeconomic stability

Higher revenue generation

Increased foreign and domestic investment

Better international credit ratings

Governors’ Concerns Over Personal Income Tax

Meanwhile, Paul Alaje, CEO of SPM, stated that many state governors are concerned about the proposed Tax Bills due to fears that Personal Income Tax (PIT) revenues will decline.

“Governors worry that since the new law seeks to exempt low-income earners from taxation, a large percentage of state government workers—who fall into this category—will no longer pay taxes,” Alaje explained.

Despite these concerns, Oyedele maintained that state governments stand to benefit in the long run, as the reforms will drive business expansion, create jobs, and ultimately boost revenue collection.