The Presidential Fiscal Policy and Tax Reforms Committee Chairman, Taiwo Oyedele has faulted Nigeria’s tax system, saying it focuses on low-income earners.
Speaking at the Finance Correspondents Association of Nigeria (FICAN)’s 2025 Annual General Meeting (AGM) in Abuja over the weekend, he emphasised the need for a tax system that encourages business growth. Oyedele said the committee asked states to furnish them with their data for tax simulation to remedy the situation.
According to him, they discovered that most states leave high-net-worth income earners who should pay taxes and concentrate on low-income earners who constitute a larger per cent.
The chairman said the tax bills awaiting the National Assembly’s approval are designed to address the inequality in tax payments. Oyedele cited South Africa as an example of a country whose bulk of tax comes from the taxes paid by one per cent of top-income earners.
He said: “How it works all over the world is that your top 5 per cent pay you more than 90 per cent of your personal income tax. “In South Africa, the top 1 per cent pay more than the bottom 99 per cent. “So you want the inequality in the country; you want the 1 per cent to pay more than the others combined.”
In the tax reform proposal, Oyedele said his committee was conscious of the tax burden that previous tax laws imposed on low-income earners. He said: “The ones we are exempting in the minimum wage are a little bit above N300,000.
“Of course, that doesn’t mean a lot to the people, but it means a lot to the low-income earners. “So our target for that was low-income earners. “Take that together; it’s N1 million a year on which you have to pay tax. “In our meeting with the states, they said the reform targets 60-70 per cent of people paying taxes in their states, and that’s correct.
“In fact, even if you increase the exemption threshold for some people they call seniors (retirees), this still collected N50 trillion, and we collected N1.5 trillion. “Every in Nigeria is chasing the bottom 90 per cent.
“They are allowing the top 10 per cent to have a field day. “So the problem is not with our proposals. “The problem is with them not collecting taxes from where the tax revenue will come from.” The chairman added: “Did you know the entire personal income tax collected in 2003 was N1.5 trillion?
“Did you know that the incremental revenue to the government was from fuel subsidy removal and the subsidy removal of FX? “If we declared a taxfree year for personal income tax, every state would see the better of us. “Did you know why? That means we forego N1.5 trillion from personal income tax to the whole country, and we make N10 trillion into federal accounts. “Why are they focusing on just one line of revenue? I don’t understand this.”
